GLOBALFOUNDRIES Inc. (NASDAQ:GFS) Analysts Just Cut Their EPS Forecasts Substantially

The latest analyst coverage could presage a bad day for GLOBALFOUNDRIES Inc. (NASDAQ:GFS), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the 17 analysts covering GLOBALFOUNDRIES, is for revenues of US$6.8b in 2024, which would reflect a considerable 8.1% reduction in GLOBALFOUNDRIES' sales over the past 12 months. Statutory earnings per share are anticipated to crater 44% to US$1.04 in the same period. Previously, the analysts had been modelling revenues of US$7.6b and earnings per share (EPS) of US$2.06 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for GLOBALFOUNDRIES

The consensus price target fell 5.4% to US$63.58, with the weaker earnings outlook clearly leading analyst valuation estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 8.1% by the end of 2024. This indicates a significant reduction from annual growth of 9.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 17% annually for the foreseeable future. It's pretty clear that GLOBALFOUNDRIES' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for GLOBALFOUNDRIES. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that GLOBALFOUNDRIES' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple GLOBALFOUNDRIES analysts - going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.