On Thursday, Citi updated its outlook on FormFactor (NASDAQ:FORM), increasing the stock price target to $46.00 from the previous $37.00, while keeping a Neutral rating on the shares.
The adjustment follows FormFactor's after-hours stock increase of 9% due to its March quarter results and guidance for the June quarter that exceeded analyst expectations. The company's performance has been driven by robust demand for advanced packaging HBM DRAM and logic.
The semiconductor company, known for its test and measurement equipment, has reportedly secured a complete share of business with SK Hynix for HBM and is believed to have captured some HBM business at Samsung (KS:005930), which accounts for over 10% of its sales.
Citi's analyst projects that second-half sales for FormFactor will likely be in the range of $185-190 million, bolstered by the strength in HBM sales during the first half of the year. The firm also suggests that FormFactor has the potential to supply at levels of $195-200 million or more.
In light of these developments, Citi has increased its earnings per share (EPS) estimates for the calendar years 2024 and 2025 by 15% each. The new stock price target of $46 is based on a consistent price-to-earnings (P/E) ratio of 23 times, which aligns with the three-year average, and is calculated against the anticipated CY25 EPS of $2. The Neutral rating is maintained by Citi due to valuation considerations.
InvestingPro Insights
FormFactor's (NASDAQ:FORM) recent performance has caught the eye of investors and analysts alike, with a notable uptick in its stock price following the release of its quarterly results. To provide further insight, InvestingPro data shows a market capitalization of $3.41 billion and a P/E ratio standing at 42.26, indicating a market recognition of the company's earnings potential.
Despite a slight decrease in revenue over the last twelve months as of Q1 2024, FormFactor's gross profit margin remains strong at 39.3%, showcasing its ability to maintain profitability.
Two key InvestingPro Tips highlight the company's financial health and market performance. Firstly, FormFactor holds more cash than debt on its balance sheet, a sign of financial stability that investors often seek.
Moreover, the company has seen a large price uptick over the last six months, with a 32.78% increase, reflecting positive market sentiment. These insights, among others, are available on InvestingPro, with more tips to help investors make informed decisions. For those interested in a deeper dive, there are 6 additional InvestingPro Tips available at: https://www.investing.com/pro/FORM.
To take advantage of these insights, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This offer could provide valuable guidance to investors looking to capitalize on the opportunities FormFactor presents in the dynamic semiconductor industry.
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