JHVEPhoto
GlobalFoundries’ (NASDAQ:GFS) second-quarter results had some puts and takes, but there were a few positives for the broader semiconductor industry, including signs of inventory stabilization, investment firm Baird said.
“Utilization rates continue to be in the low to mid-70s and lifetime revenue tied to [long-term agreements] is about $18 billion,” analyst Tristan Gerra wrote in an investor note. “[Free cash flow] generation continues to expand, with management now expecting 3x higher FCF compared with 2023.”
Gerra also noted that GlobalFoundries acquired Tagore Technology’s’ gallium nitride power business, which should expand its product portfolio and grow its total serviceable addressable market by $1.6B by 2030.
Gerra reiterated his Outperform rating and $63 price target on the stock.
In addition, Gerra also called out that pricing is “stable,” as it was flat year-over-year in the second-quarter. And even though analog chip suppliers have made comments about weakness in the automotive industry, autos is still a bright spot for GlobalFoundries, as “meaningful” year-over-year growth is still expected for the rest of the year.
GlobalFoundries shares were fractionally higher in midday trading on Wednesday.
