GlobalFoundries Is at the Right Place, at the Right Time, BofA Says

The logo of U.S. chipmaker Globalfoundries can be seen at the company's plant in Dresden, eastern Germany, on March 4, 2009. (Norbert Millauer/DDP/AFP via Getty Images)

GlobalFoundries Inc. is well-positioned with only a 10 percent share of an addressable market opportunity estimated at $70 billion, across smartphone devices, Internet of things, automotive and data center, according to Bank of America (BofA) Securities.

GlobalFoundries Analyst

Vivek Arya initiated coverage of GlobalFoundries with a Buy rating and a price target of $88.

GlobalFoundries Thesis

The company has long-term proprietary agreements worth around $20 billion, which gives strong visibility and pricing power, Arya said in the initiation note.

GlobalFoundries has “a Tier-1 base of customers,” including Qualcomm Inc., NXP Semiconductors NV, Analog Devices Inc., and Advanced Micro Devices Inc., the analyst added.

“Emerging multi-year partnerships with automakers (Ford) and Tier-1s (Bosch) to address structural supply issues” as well as “lower capital intensity, stronger FCF over time due to deliver proprietary products on lower-cost/lagging edge equipment” are the other positives, Arya mentioned.

Price Action

Shares of GlobalFoundries had risen by 3.03 percent to $63.99 on Monday.

By Priya Nigam

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