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Cautious Hold Rating on Formfactor Amid Revenue Growth and Tariff Challenges

Cautious Hold Rating on Formfactor Amid Revenue Growth and Tariff Challenges

Formfactor (FORMResearch 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.

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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.

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