BofA Securities Starts GlobalFoundries Inc. (GFS) at Buy

BofA Securities analyst Vivek Arya initiates coverage on GlobalFoundries Inc. (NASDAQ: GFS) with a Buy rating and a price target of $88.00.

The analyst comments "We initiate coverage on Malta, NY-based GlobalFoundries (ticker: GFS) with a Buy rating and $88 PO, implying 40% upside potential, based on compelling 12% sales and 32% EBITDA CAGR over the next three years. As the #1 US-based outsourced chip manufacturer (aka foundry) with no Taiwan/China footprint, we believe GFS is uniquely positioned to benefit from: (1) only 10% share in a $70bn addressable market opportunity across smart mobile devices, IoT, automotive and data center; 2) Solid visibility and pricing power with ~$20bn in long-term proprietary agreements (3x current sales) with a Tier-1 base of customers including Qualcomm, NXP, Analog Devices, AMD; (3) Emerging multi-year partnerships with automakers (Ford) and Tier-1s (Bosch) to address structural supply issues; 4) lower capital intensity, stronger FCF over time due to deliver proprietary products on lower-cost/lagging edge equipment; and 5) benefit of increasing government incentives in US (Chips Act), Singapore and Europe. Our $88 PO is based on 13x CY23E EV/EBITDA, in the middle of Asian pure-play foundry peers (10x) and US integrated design/manufacture peers (14x) though closer to US comps given recent positive Qualcomm/Ford news flow."

For an analyst ratings summary and ratings history on GlobalFoundries Inc. click here. For more ratings news on GlobalFoundries Inc. click here.

Shares of GlobalFoundries Inc. closed at $61.94 yesterday.

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