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Formfactor (FORM)
NASDAQ:FORM
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Formfactor
(NASDAQ:FORM)
66Neutral
Positive Factors
Customer Expansion
Growing exposure to a 2nd HBM customer is a tailwind, though majority of demand remain centered with the company's biggest customer.
Market Leadership
FormFactor is poised to exit 2024 at revenue levels roughly on par with 2021, thanks to its market-leading position supplying into the HBM DRAM market.
Recovery and Growth
FormFactor reported a beat-and-raise quarter and delivered a rare V-shaped recovery after a disappointing print.
Negative Factors
Customer Challenges
The company faces challenges with its former top customer, INTC, which is tracking below norms with uncertain recovery timing.
Guidance and Expectations
Guidance includes ~$5M of lost revenue from tariffs (mainly customers in China) and 1ppt impact on GM as a result.
Tariff and Regulation Impact
US BIS shipment restrictions have significantly impacted China's demand for probe cards, contributing to a year-over-year growth headwind.
Formfactor (FORM) vs. S&P 500 (SPY)
Market Cap
$2.33B
Dividend YieldN/A
Average Volume (3M)1.04M
Price to Earnings (P/E)43.9
Beta (1Y)2.09
Revenue Growth15.33%
EPS Growth-47.04%
CountryUS
Employees2,238
SectorTechnology
Sector Strength69
IndustrySemiconductors
Share Statistics
EPS (TTM)0.69
Shares Outstanding77,075,640
10 Day Avg. Volume1,087,134
30 Day Avg. Volume1,044,717
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.40
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit10.58
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.38Price Target Upside26.83% Upside
Rating ConsensusHold
Number of Analyst Covering9
Formfactor Business Overview & Revenue Model
Company DescriptionFormFactor, Inc. designs, manufactures, and sells probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems to semiconductor companies and scientific institutions. It operates in two segments, Probe Cards and Systems. The company offers probe cards to test various semiconductor device types, including systems on a chip products, mobile application processors, microprocessors, microcontrollers, and graphic processors, as well as radio frequency, analog, mixed signal, image sensor, electro-optical, dynamic random access memory, NAND flash memory, and NOR flash memory devices; and analytical probes, which are used for a range of applications, including device characterization, electrical simulation model development, failure analysis, and prototype design debugging for universities, research institutions, semiconductor integrated device manufacturers, semiconductor foundries, and fabless semiconductor companies. It also provides probing systems for semiconductor design engineers to capture and analyze accurate data; surface metrology systems for the development, production, and quality control of semiconductor products; thermal subsystems, such as thermal chucks and other test systems used in probe stations and other applications; and precision cryogenic instruments, semiconductor tests, and measurement systems. In addition, the company offers on-site probe card maintenance and service training, seminars, and telephone support services. The company markets and sells its products through direct sales force, manufacturers' representatives, and distributors in the United States, Taiwan, South Korea, China, Japan, Europe, rest of Asia-Pacific, and internationally. FormFactor, Inc. was incorporated in 1993 and is headquartered in Livermore, California.
How the Company Makes MoneyFormFactor generates revenue primarily through the sale of its probe card products, which are used by semiconductor manufacturers to test ICs during the fabrication process. These products are essential for ensuring the quality and functionality of semiconductors before they are packaged and shipped to customers. The company also earns revenue from its analytical probes and engineering systems, which are utilized in research and development as well as in production environments to enhance the efficiency and accuracy of semiconductor testing. FormFactor's significant partnerships with major semiconductor manufacturers and foundries contribute to its earnings by securing long-term contracts and ensuring a steady demand for its products. Additionally, the company's focus on innovation and the advancement of testing technologies helps maintain its competitive edge and drives growth in its revenue streams.
Formfactor Financial Statement Overview
Summary
FormFactor shows stable revenue and profitability but faces pressure on margins and cash flows. The balance sheet reflects low debt levels, indicating financial stability. However, challenges in operational efficiency and cash flow management are areas that require improvement for sustained growth.Income Statement
Formfactor shows a stable Gross Profit Margin of approximately 40% over the periods, indicating efficiency in cost management. However, the Net Profit Margin has seen a decline from the previous year, primarily due to a decrease in EBIT, which has impacted profitability. The Revenue Growth Rate is modest but positive, reflecting steady growth in sales, though the latest TTM shows a slight dip. Margins such as EBIT and EBITDA have decreased in the latest TTM, signaling potential challenges in operational efficiency.75
Positive
Balance Sheet
The company maintains a strong balance sheet with a low Debt-to-Equity Ratio, highlighting financial stability and low leverage. ROE has decreased slightly, aligning with the dip in net income, yet remains healthy. The Equity Ratio indicates a robust capital structure with a high proportion of equity funding the assets, reducing financial risk.78
Positive
Cash Flow
Operating Cash Flow remains positive, although it has decreased compared to the previous year, which could constrain liquidity if the trend continues. Free Cash Flow has decreased in the TTM period, reflecting lower operational efficiency and capital expenditure management. The ratio of Operating Cash Flow to Net Income suggests reasonable cash generation from earnings, albeit with room for improvement.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 763.60M | 663.10M | 747.94M | 769.67M | 693.62M | Gross Profit |
| 307.92M | 258.58M | 296.01M | 322.77M | 287.92M | EBIT |
| 64.78M | 82.76M | 54.91M | 98.04M | 83.79M | EBITDA |
| 119.54M | 134.53M | 104.64M | 150.79M | 140.68M | Net Income Common Stockholders |
| 69.61M | 82.39M | 50.74M | 83.92M | 78.52M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 360.02M | 328.32M | 238.13M | 276.06M | 255.03M | Total Assets |
| 1.15B | 1.11B | 1.01B | 1.02B | 963.22M | Total Debt |
| 39.23M | 48.15M | 50.37M | 63.27M | 69.19M | Net Debt |
| -151.50M | -129.67M | -55.75M | -87.73M | -118.03M | Total Liabilities |
| 198.45M | 197.99M | 199.94M | 204.74M | 219.13M | Stockholders Equity |
| 947.77M | 908.80M | 808.28M | 815.78M | 744.08M |
| Cash Flow | Free Cash Flow | |||
| 79.10M | 8.57M | 66.53M | 72.87M | 113.39M | Operating Cash Flow |
| 117.53M | 64.60M | 131.78M | 139.36M | 169.26M | Investing Cash Flow |
| -33.48M | 29.05M | -78.69M | -124.74M | -98.92M | Financing Cash Flow |
| -64.61M | -22.71M | -95.93M | -47.20M | -30.93M |
Formfactor Technical Analysis
Positive
30.26
Price Trends
29.68
Positive
35.75
Negative
40.48
Negative
Market Momentum
-0.19
Negative
58.08
Neutral
72.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FORM, the sentiment is Positive. The current price of 30.26 is above the 20-day moving average (MA) of 26.87, above the 50-day MA of 29.68, and below the 200-day MA of 40.48, indicating a neutral trend. The MACD of -0.19 indicates Negative momentum. The RSI at 58.08 is Neutral, neither overbought nor oversold. The STOCH value of 72.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FORM.
Formfactor Risk Analysis
Formfactor disclosed 34 risk factors in its most recent earnings report. Formfactor reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Formfactor Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $3.00B | 27.19 | 23.12% | 1.94% | 36.10% | 48.15% | |
70 Outperform | $1.79B | 19.88 | 12.33% | 3.95% | 10.78% | 58.82% | |
70 Neutral | $1.14B | 16.00 | 10.43% | ― | 7.63% | ― | |
66 Neutral | $2.33B | 43.87 | 5.74% | ― | 15.33% | -47.04% | |
60 Neutral | $10.95B | 10.52 | -7.07% | 3.00% | 7.30% | -12.04% | |
50 Neutral | $1.72B | 272.13 | 0.31% | 2.51% | -4.92% | -85.39% | |
47 Neutral | $2.14B | ― | -20.89% | ― | 25.78% | 32.95% |
* Technology Sector Average
Performance Comparison
FORM
Formfactor
30.26
-25.01
-45.25%
CAMT
Camtek
68.57
-15.90
-18.82%
KLIC
Kulicke & Soffa
33.22
-13.38
-28.71%
SIMO
Silicon Motion
53.51
-22.48
-29.58%
VECO
Veeco
19.67
-17.82
-47.53%
AMBA
Ambarella
50.43
2.61
5.46%
Formfactor Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 7.53%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted expected growth in key areas such as HBM probe cards and new acquisitions, but also noted significant challenges, including revenue declines, tariff impacts, and decreased profitability metrics. The sentiment is mixed with positive outlooks overshadowed by current operational and geopolitical challenges.Q1-2025 Updates
Positive Updates
Anticipated Double-Digit Sequential Revenue Growth
FormFactor expects double-digit sequential revenue growth in the second quarter, driven by hyperscalers' investments in generative AI and increased demand for high bandwidth memory DRAM probe cards.
Strength in HBM Probe Card Demand
Record-level DRAM probe card revenue is expected in the second quarter, with growth in HBM applications, driven by shipments for existing HBM3e and new HBM4 designs.
Successful Acquisition to Enhance Product Capability
FormFactor, along with MBK Partners, completed the acquisition of FICT Limited, solidifying access to multilayer organic substrates technology needed for advanced foundry and logic probe cards.
Systems Segment Growth Driven by Innovation
The Systems segment expects moderate sequential growth, driven by innovation in areas like quantum computing and co-package optics using silicon photonics.
Completion of Share Buyback Program
FormFactor completed a two-year $75 million share repurchase program, ahead of schedule, and the Board approved a new two-year $75 million program.
Negative Updates
First Quarter Revenue Decline
First quarter revenues decreased 9.6% from the fourth quarter, with a 9.2% decrease in Probe card segment revenues and a 4.4 million decrease in System segment revenues.
Tariff Impact on Revenue and Costs
Anticipated mid-single-digit million-dollar reduction in second-quarter revenues and a one percentage point reduction in gross margins due to tariffs on imports, particularly affecting goods imported from Japan and Germany.
Challenges in China Due to Tariffs and Export Controls
Recent tariff increases and U.S. export controls reduced revenue from China, impacting shipments of probe cards for advanced DRAM designs.
Decreased Gross Margin and Operating Income
Non-GAAP gross margin decreased to 39.2% from 40.2% in the fourth quarter, and non-GAAP operating income decreased by 19.2% due to lower revenues and gross margins.
Decreased Free Cash Flow
Free cash flow decreased to $6.3 million from $28.8 million in the previous quarter, due to lower operating cash flows and higher capital expenditures.
Company Guidance
During FormFactor's Q1 2025 earnings call, the company provided guidance anticipating double-digit sequential revenue growth in Q2, driven by increased demand across all major markets and segments. CEO Mike Slessor highlighted the growth in demand for high bandwidth memory (HBM) DRAM probe cards and co-package optics test systems, largely due to hyperscalers investing in generative AI. The guidance also anticipated corresponding increases in gross margin and earnings per share. CFO Shai Shahar presented financial highlights, noting Q1 revenues of $171.4 million and a non-GAAP gross margin of 39.2%. For Q2, the revenue is expected to rise to $190 million, plus or minus $5 million, with a gross margin increase to 40% plus or minus 150 basis points. The company's outlook incorporates potential revenue and gross margin impacts due to tariffs, with an estimated mid-single-digit million-dollar reduction in revenues and a one percentage point decrease in gross margins.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.