GlobalFoundries
stock dropped on Tuesday after an analyst outlined concerns for the semiconductor stock.
Susquehanna’s Mehdi Hosseini downgraded shares to Neutral from Positive and cut his share price target to $48 from $65.
The stock was off 2.3%, to $53.36—the top decliner in the
Nasdaq 100.
Other semi stocks were also falling:
Taiwan Semiconductor,
1.7%,
Applied Materials,
0.1%, and
Broadcom,
1.9%.
“Although the downside risk to the consensus estimates appears to be limited, it is lack of upside and lack of any catalyst on the near-term horizon that are expected to negatively weigh on the share price,” Hosseini said in a research note.
GlobalFoundries
has had a difficult start to the year. Chip demand has wavered, and chief executive Thomas Caulfield said on the company’s Feb. 13 fourth-quarter earnings call that ”the ongoing high-interest rate environment” had led to a cyclical downturn that was longer and deeper than expected by many in the semiconductor industry.
On Monday, the Semiconductor Industry Association reported that global semi sales in January increased 15% to $47.6 billion from the year before, but dropped 2.1% from December. In February, the association reported that global semi sales declined 8.2% in 2023 compared to 2022.
In his note, Hosseini also wrote about Global Foundries’ revenue, content growth, and scaling. When it released earnings in February, the company provided first-quarter financial guidance that was below the consensus call among analysts.
“Although revenue is expected to improve from 1H24 into 2H24, it is the moderate slope of the recovery that has led to estimate reduction,” Hosseini said. “This is driven by lack of content growth as well as losing confidence in company scaling of new substrates and products.”
Write to Angela Palumbo at [email protected]
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