Cautious Hold Rating on Formfactor Amid Revenue Growth and Tariff Challenges

Formfactor (FORM – Research Report), the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst Krish Sankar from TD Cowen maintained a Hold rating on the stock and has a $35.00 price target.

Krish Sankar has given his Hold rating due to a combination of factors impacting Formfactor’s performance. The company has shown revenue growth slightly above market expectations, driven by demand in high bandwidth memory (HBM) and foundry/logic sectors. However, the impact of tariffs, particularly affecting Chinese customers, and macroeconomic uncertainties present challenges, alongside short lead times and valuation concerns, which contribute to a cautious stance.
Despite improvements in certain areas, such as increased foundry/logic demand due to design activity in client PCs and smartphones, and projected growth in HBM revenues, there are still risks. The company’s exposure to custom hyperscale ASICs and co-packaged optics shows potential, but the concentration of demand with a major customer like Hynix and the lack of significant demand pull-ins for customized probe cards add to the uncertainty. Additionally, the cost implications of tariffs on the company’s largely US-based manufacturing operations remain unclear, though there is some flexibility in sourcing from low-tariff regions.

Sankar covers the Technology sector, focusing on stocks such as Pure Storage, Apple, and Formfactor. According to TipRanks, Sankar has an average return of 10.2% and a 47.32% success rate on recommended stocks.

In another report released on April 21, B.Riley Financial also maintained a Hold rating on the stock with a $26.00 price target.