On Thursday, TD (TSX:TD) Cowen updated its outlook for FormFactor (NASDAQ:FORM) shares, a leading semiconductor testing equipment provider, by raising the price target to $48 from the previous $37. The firm maintained its Hold rating on the stock.
FormFactor reported a strong performance for the first quarter of 2024, which ended in March, and provided guidance for the second quarter ending in June that exceeded market expectations. The company's growth has been significantly driven by the demand for high bandwidth memory (HBM) probe cards, a trend that is expected to continue.
The company is estimated to achieve sales of over $50 million in the first half of 2024, a substantial increase from approximately $30 million in the calendar year 2023. The demand for HBM probe cards is anticipated to expand beyond FormFactor's main customers, and advancements in packaging are contributing to increased testing intensity.
Despite the positive outlook, TD Cowen noted some challenges facing FormFactor. Margins are under pressure due to a changing product mix, and there is limited visibility into future performance. Nevertheless, the upward guidance provided by the company and the potential for growth in demand for its products have led to the revised price target of $48.
InvestingPro Insights
FormFactor's recent performance and future prospects have caught the eye of investors and analysts alike. With a market capitalization of $3.41 billion and a notable high return over the last year of 61.73%, the company stands out in the semiconductor testing equipment segment. The InvestingPro Data highlights a P/E ratio of 42.26, indicating investor confidence in earnings potential, especially relevant given the company's high return over the last year.
Two InvestingPro Tips that are pertinent to FormFactor's current situation include the fact that the company holds more cash than debt on its balance sheet, suggesting a strong financial position, and the company's trading at a low P/E ratio relative to near-term earnings growth, which could appeal to value investors. Additionally, analysts predict the company will be profitable this year, aligning with the optimistic tone set by TD Cowen's revised price target.
For investors looking to delve deeper into FormFactor's financial health and future outlook, InvestingPro offers additional tips. There are currently 6 more InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/FORM. To further enrich your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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