On Thursday, Needham raised the price target for FormFactor (NASDAQ:FORM) to $53.00, up from the previous $46.00, while reaffirming a Buy rating on the stock. This adjustment follows FormFactor's recent financial results, which surpassed expectations and included a revenue forecast for the second quarter of 2024 that suggests significant sequential growth.
FormFactor reported robust earnings and provided guidance for second-quarter 2024 revenue that is expected to be 16% higher than the previous quarter at the midpoint. This forecasted increase would represent the most substantial quarter-over-quarter growth since the fourth quarter of 2019.
The company's management attributes this anticipated growth to several factors, including ongoing high demand for High Bandwidth (NASDAQ:BAND) Memory (HBM), increased orders from Intel (NASDAQ:INTC) for client and server microprocessors, and an upcoming refresh of Android mobile processors.
The company is optimistic about the future, particularly with regards to HBM, which currently constitutes approximately 15% of FormFactor's revenue. The growth in HBM is expected to continue into the second half of 2024, as the second and third largest HBM providers in the industry aim to scale up production volumes.
With these developments, expectations are that FormFactor will meet its revenue goal of $850 million and earnings per share (EPS) of $2.00 by 2025. The new price target of $53.00 is based on 28 times the projected next-generation EPS for calendar year 2025. The Buy rating has been maintained, reflecting confidence in the company's growth trajectory and financial targets.
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