Tuesday, Evercore ISI initiated coverage on shares of GlobalFoundries Inc. (NASDAQ:GFS) with an Outperform rating and a price target of $71.00. The firm identified GlobalFoundries as a significant player in the rapidly growing Internet of Things (IoT) market, which is projected to expand to tens of billions of units.
The analyst from Evercore ISI predicts that GlobalFoundries' operating margins (OMs) will see a substantial increase of 2000 basis points over the coming decade. This expansion is anticipated as the company moves past its capital expenditure cycle around 2023 and begins to see a rise in free cash flow per share. The free cash flow per share is expected to grow from approximately $0.58 in 2023 to $2.23 in 2025.
GlobalFoundries' stock is seen to maintain a premium price-to-earnings (P/E) ratio compared to the S&P 500 index. This valuation is based on the company's strategic position as a local foundry supplier and its potential financial growth trajectory as outlined by the analyst.
The firm's positive outlook on GlobalFoundries reflects confidence in the company's ability to capitalize on the IoT market's expansion. The analyst's commentary suggests a strong future performance, with the company's financial measures improving significantly in the next few years.
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