Thursday, October 31, 2024 - FormFactor (NASDAQ:FORM) had its stock price target reduced by Needham from $60.00 to $52.00, though the firm maintained a Buy rating on the stock. The adjustment follows FormFactor's third-quarter earnings report and fourth-quarter guidance, which indicated a downturn in consumer electronics demand impacting revenue from Foundry/Logic probe cards.
The company reported a solid third quarter for 2024 but provided guidance for the fourth quarter that fell below consensus expectations. The anticipated decline in consumer electronics such as PCs and smartphones is expected to affect Foundry/Logic probe card revenue negatively as the year progresses.
Despite the weaker forecast in certain areas, there is a silver lining. FormFactor expects DRAM probe card revenue to reach a new record in the next quarter. This optimism is underpinned by a strong backlog that should lead to a rebound in HBM revenue, which saw a temporary pullback in the third quarter of 2024.
For the full year, FormFactor is projecting to generate between $120 million and $130 million in revenue from HBM, accounting for nearly all of the company's incremental revenue in 2024. This performance is reflective of the current semiconductor market trends, which show strength in areas such as AI but weakness in other sectors.
In light of the mixed market conditions and the anticipated consumer softness, Needham has also revised its 2025 estimates for FormFactor. Despite the reduced stock price target and the adjustments to future estimates, Needham's Buy rating indicates a continued positive outlook on the stock's potential.
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