One thing we could say about the analysts on GLOBALFOUNDRIES Inc. (NASDAQ:GFS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After the downgrade, the consensus from GLOBALFOUNDRIES' 17 analysts is for revenues of US$6.8b in 2024, which would reflect an uneasy 8.1% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to tumble 44% to US$1.04 in the same period. Prior to this update, the analysts had been forecasting revenues of US$7.6b and earnings per share (EPS) of US$2.06 in 2024. Indeed, we can see that the analysts are a lot more bearish about GLOBALFOUNDRIES' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
The consensus price target fell 5.4% to US$63.58, with the weaker earnings outlook clearly leading analyst valuation estimates.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. 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. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 17% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - GLOBALFOUNDRIES is expected to lag 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. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of GLOBALFOUNDRIES.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple GLOBALFOUNDRIES analysts - going out to 2026, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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