GlobalFoundries (GFS) is well positioned compared with its semiconductor foundry peers but an oversupply of mature nodes, among other risks, is likely to offset the stock's upside potential, UBS said in a note emailed Wednesday.

Another risk to GlobalFoundries' upside potential is Intel's (INTC) efforts to enter the foundry ecosystem, UBS said.

"Underutilization has been exacerbated by recent capacity expansion not only at GlobalFoundries but also across the industry," the firm said. "Though GlobalFoundries is temporarily curtailing expansion plans, the industry is not standing still with an additional 5% of mature-node wafer capacity coming online over the next two years."

A prolonged period of overcapacity and underutilization in the industry is likely to weigh on pricing, "though we acknowledge that GlobalFoundries may be slightly more insulated from pricing pressure given the sole source nature of the majority of its business and its differentiated product/technology offerings," UBS said.

GlobalFoundries is also seen as "generally a bit more levered to mobility markets" compared with its rivals such as Taiwan Semiconductor Manufacturing (TSM) and United Microelectronics (UMC), UBS said.

UBS initiated coverage of GlobalFoundries with a neutral rating and a $47 price target.

GlobalFoundries shares were down 2.8% in recent trading.

Price: 41.20, Change: -1.18, Percent Change: -2.78