Contract chipmaker GlobalFoundries on Tuesday beat Wall Street's targets for the second quarter but offered mixed guidance for the current period. GFS stock fell after the report.
The Malta, N.Y.-based company earned an adjusted 38 cents a share on sales of $1.63 billion in the June quarter. Analysts polled by FactSet had expected GlobalFoundries earnings of 29 cents a share on sales of $1.61 billion. On a year-over-year basis, GlobalFoundries earnings fell 28% while sales declined 12%.
GlobalFoundries is navigating a cyclical downturn in business from fabless chipmakers exposed to automotive, industrial and other markets.
For the current quarter, GlobalFoundries expects to earn an adjusted 33 cents a share on sales of $1.725 billion. That's based on the midpoint of its guidance. Wall Street was modeling earnings of 35 cents a share on sales of $1.72 billion in the third quarter. In the year-earlier period, GlobalFoundries earned an adjusted 55 cents a share on sales of $1.85 billion.
GFS Stock Falls After Report
On the stock market today, GFS stock dropped 3.4% to close at 43.23. Year-to-date through Tuesday's close, GFS stock is down 28.7%.
"We remain focused on a disciplined capex strategy and strong cash flow," Chief Executive Thomas Caulfield said in a news release.
Of its main market segments, automotive was the top performer in the second quarter, with sales up 10% year over year to $270 million.
GlobalFoundries' largest segment, smart mobile devices, saw sales dip 3% to $762 million in the period.
GlobalFoundries Gets Price-Target Cuts
At least four Wall Street firms cut their price targets on GlobalFoundries stock after the Q2 report.
Jefferies analyst Blayne Curtis reiterated his buy rating on GFS stock but lowered his price target to 55 from 62. He said the market recovery is taking longer than hoped.
"Many end markets are continuing to work down inventories and, while there are some green shoots such as auto, the broader improvement is likely next year," he said in a client note.
GFS stock ranks No. 15 out of 32 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. It has a poor IBD Composite Rating of 12 out of 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
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