Shares of Globalfoundries (NASDAQ:) are up greater than 4% in premarket buying and selling Wednesday after the corporate reported better-than-expected Q1 outcomes and issued an upbeat Q2 forecast.

GFS Q1 adjusted EPS of 42c, topping the consensus estimates of 24c per share. Income got here in at $1.94 billion, barely above the estimated $1.9 billion.

The corporate reported a Q1 adjusted gross margin of 25.3%, whereas money and money equivalents totaled $3.26 billion.

For Q2, GFS expects income within the vary of $1.96 billion to $1.99 billion, beating the estimated $1.93 billion. Adjusted EBITDA is predicted to be between $705 billion and $745 billion, whereas analysts had been in search of $648 million.

“Regardless of world provide chain challenges, the GF crew continues to execute to plan, and we stay on observe to ship a powerful 12 months of development and profitability,” the corporate mentioned.

Morgan Stanley analyst Joseph Moore mentioned GFS delivered “essentially the most vital beat-and-raise quarter for the reason that IPO as revenues got here in barely larger and prices had been considerably decrease in value of gross sales and opex.”

The analyst hiked the worth goal to $72.00 per share, up from $65.00.

“This was a really robust quarter with the most important upward revision for the reason that IPO. GFS posted upside in income, gross margin, and working margin, and decrease share depend driving EPS upside near 50% for 1H22. Whereas we stay anxious concerning the smartphone weak point that we’re seeing at some clients, the corporate highlighted power in higher-end 5G globally and pointed to robust circumstances in 2H. Estimates for subsequent 12 months come up 12%, mainly neutralizing the a number of compression from our preview,” Moore wrote in a word.

BofA analyst Vivek Arya reduce the worth goal to $75.00 per share, down from $82.00. The analyst commented:

“We imagine outcomes can soothe buyers’ issues re: (1) n-t macro slowdown impacting GFS utilization (and in flip shipments/GMs): GFS is totally booked via 2023 and famous fungibility of provide within the occasion of weak point in any market; (2) smartphone/PC slowdown: PC gross sales did fall 60% QoQ/YoY in Q1 (will seemingly be the trough) however had been greater than offset by power in knowledge middle, comms and IoT. In the meantime in smartphones, GFS did word some normalization in low-end handset market (low/medium finish China shipments -30% YoY), however its concentrate on transition to characteristic wealthy handsets enabled double digit QoQ/YoY development.”

By Senad Karaahmetovic