Overview#
BofA Securities has raised its price target for GlobalFoundries Inc. (NASDAQ:GFS) from $45 to $60, while maintaining an Underperform rating. This adjustment comes after the company reported strong earnings for the March quarter, exceeding expectations in profit per share and gross margin.
Earnings Performance#
GlobalFoundries reported earnings per share (EPS) of $0.40, surpassing the forecast of $0.35, which resulted in a 14.29% surprise. Revenue for the quarter was $1.634 billion, aligning with market forecasts. The company’s gross margin improved to 29%, aided by a favorable mix of products, which contributed to a 20% increase in profit per share.
Market Position and Future Outlook#
BofA highlighted GlobalFoundries’ strategic shift towards high-demand markets, including Automotive, which accounts for 21% of sales, and Communications Infrastructure and Data Center, contributing 11%. However, the firm noted potential declines in sales from the Smart Mobile sector, which could see a high single-digit drop year-over-year in 2026.
Valuation Insights#
The price target increase to $60 is based on a new valuation metric of 12 times enterprise value to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), up from 9 times. This aligns with the median valuation of similar companies in the foundry and mobile sectors. Despite this increase, GlobalFoundries is currently trading at an EV/EBITDA of 18.51, indicating it may be overvalued compared to its fair value estimate. The stock has seen a significant year-to-date gain of 94%, trading at $74.03, which is above its 52-week high of $69.30.