Section 1: Company Overview and Fundamentals

1.1 Company Overview:

GlobalFoundries Inc. (NASDAQ: GFS) is a semiconductor manufacturer. The Company offers a range of mainstream wafer fabrication services and technologies. It manufactures a range of semiconductor devices, including microprocessors, mobile application processors, baseband processors, network processors, radio frequency modems, microcontrollers, and power management units.

Kalkine’s American Tech Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock has given a mere return of 3.23% in the last three months on the other hand has corrected by 8.03% in past nine months.
• The stock is leaning towards the lower band of its 52-week range of high USD 68.57 and 52-week low price of USD 45.52, with the current price breaking above an important resistance zone of USD 50.00-USD 52.50, with expectations of upward momentum, if these levels sustains.
• The price is currently between both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 65.21.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Top 10 shareholders:

The top 10 shareholders together form ~99.38% of the total shareholding, signifying concentrated shareholding. Mubadala Investment Company PJSC, and Fidelity Management & Research Company LLC, are the biggest shareholders, holding the maximum stake in the company at ~85.12% and ~7.46%, respectively.

1.4 Key Metrics:

In the first quarter of fiscal year 2024, GlobalFoundries (GFS) demonstrated a strong financial performance compared to the industry median. GFS achieved an EBITDA margin of 34.8%, significantly higher than the industry median of 17.7%, indicating robust operational efficiency and profitability. The company's operating margin was 9.5%, slightly below the industry median of 9.7%, suggesting that while GFS is performing well, it faces similar operational cost pressures as its peers. The pretax margin for GFS stood at 10.0%, marginally under the industry median of 10.1%, reflecting competitive pretax earnings. Lastly, GFS reported a net margin of 8.7%, surpassing the industry median of 7.1%, which underscores its ability to convert revenue into net profit more effectively than many of its competitors. Overall, these figures infer that GFS is managing to outperform industry standards in several key financial metrics, particularly in terms of EBITDA and net margins, despite a competitive operating environment.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q1FY24:

Section 3: Key Risks & Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has given a mere return of 3.23% in the last three months on the other hand has corrected by 8.03% in past nine months.
• The stock is leaning towards the lower band of its 52-week range of high USD 68.57 and 52-week low price of USD 45.52, with the current price breaking above an important resistance zone of USD 50.00-USD 52.50, with expectations of upward momentum, if these levels sustains.
• The price is currently between both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 65.21.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is July 09, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.