Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 6 Feb, 26 | FORM | Buy | USD 83.87 | USD 88.5 | USD 93.5 | Same day | Closed |
7.65%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
FormFactor, Inc. designs, manufactures, and sells probe cards, analytical probes, probe stations, thermal systems, cryogenic systems, and related services in the United States, South Korea, Taiwan, China, Japan, Singapore, Europe, Malaysia, and internationally. The company operates in two segments: Probe Cards and Systems segments. The company provides probe cards to test various semiconductor device types, including systems- on-chip products, such as graphics, central, digital processing units, and other custom application-specific processing units; mobile application processors, microprocessors, and microcontrollers; network devices, which include switches and network processing units; dynamic random-access memory; radio-frequency amplifiers and filters; antenna-in-package devices; analog and mixed-signal integrated circuits; image sensors; co-packaged optical integrated circuits; NAND flash memory; NOR flash memory; and quantum computer processor devices. It also offers analytical probes, which are used for device characterization, electrical simulation model development, failure analysis, and prototype design debugging; probe stations, a critical tool for the development of new generations of semiconductor and electro-optical processes and designs; and thermal subsystems, which include thermal chucks and other test systems used in probe stations and other applications for precise temperature management. In addition, the company provides cryogenic systems, which includes the manufacture of precision cryogenic instruments and semiconductor test and measurement systems; and services and support, including installation services. Further, it offers on-site probe card maintenance and service training, seminars, and telephone support services. It markets and sells its products through direct sales force, manufacturers' representatives, and distributors. The company was incorporated in 1993 and is headquartered in Livermore, California.
Improvement in Core Earnings Quality: FY25 non-GAAP net income of USD 101.5 million vs FY24 non-GAAP net income of USD 90.2 million
Revenue Expansion Supported by Advanced Packaging Demand: FY25 revenue of USD 785.0 million vs FY24 revenue of USD 763.6 million, reflecting a 2.8% year-over-year increase
Material Reduction in Free Cash Flow: FY25 free cash flow of USD 13.6 million vs FY24 free cash flow of USD 82.8 million
Full-Year Gross Margin Compression: FY25 GAAP gross margin of 39.3% vs FY24 GAAP gross margin of 40.3%
FormFactor’s performance remains sensitive to semiconductor capital spending cycles, customer concentration in memory and advanced packaging markets, and the execution risk associated with high capital intensity and capacity expansion initiatives
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 83.87 | 74.0 | 88.5 | 93.5 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Revenue Growth Driven by Advanced Packaging Demand: FormFactor delivered record FY25 revenue of USD 785.0 million, reflecting a 2.8% increase over FY24 revenue of USD 763.6 million, supported primarily by strong demand in high-bandwidth memory (HBM) and advanced DRAM applications. Growth was underpinned by rising test intensity and increasing semiconductor complexity across AI, data center, and advanced packaging use cases.
Segment-Level Performance and Product Mix: Operationally, the Probe Cards segment remained the core revenue driver, contributing approximately 81% of FY25 revenue, with Systems accounting for the balance. DRAM revenue reached a record level during FY25, supported by both HBM and non-HBM DDR4/DDR5 demand, while Foundry & Logic demand remained resilient despite broader industry cyclicality.
Margin Performance Reflects Second-Half Recovery: FY25 GAAP gross margin declined modestly to 39.3% from 40.3% in FY24, largely due to capacity ramp costs and acquisition-related impacts earlier in the year. However, margin performance improved meaningfully in the second half of FY25, with Q4 GAAP gross margin rising to 42.2%, reflecting improved factory utilization and product mix optimization.
Earnings Normalization and Operating Leverage: GAAP net income declined to USD 54.4 million in FY25 from USD 69.6 million in FY24, reflecting the absence of prior-year gains on asset divestitures. On a normalized basis, non-GAAP net income increased to USD 101.5 million from USD 90.2 million, demonstrating improved underlying profitability and operating leverage.
Cash Flow and Capital Investment Profile: Operating cash flow remained stable at USD 115.4 million in FY25 versus USD 117.5 million in FY24, while free cash flow declined sharply to USD 13.6 million from USD 82.8 million, driven by elevated capital expenditures related to capacity expansion and the acquisition of new manufacturing assets.
Balance Sheet Strength and Capital Allocation: Despite higher investment activity, FormFactor exited FY25 with a strong balance sheet, including USD 107.0 million in cash and restricted cash and modest long-term debt of approximately USD 12.2 million, preserving financial flexibility to support organic growth, R&D, and selective acquisitions.
Strategic Positioning and Outlook: Operational execution during FY25 strengthened FormFactor’s leadership in advanced probe cards and co-packaged optics testing, reinforced by the acquisition of Keystone Photonics. Management expects continued margin expansion and revenue growth into FY26 as incremental capacity comes online and advanced packaging demand accelerates.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given to FormFactor, Inc. (NASDAQ: FORM) at the closing market price of USD 83.87, as on Feb 05, 2026
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Semiconductor Equipment & Materials
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| FORM FormFactor Inc |
9.60 6.86% | 149.55 | 205.86 | 76.34 | 14.11 | 10.69 | 13.80 | 100.74 |
| ASML ASML Holding NV ADR |
61.85 3.31% | 1929.68 | 48.54 | 41.49 | 17.21 | 23.21 | 14.06 | 36.48 |
| ASMLF ASML Holding NV |
- -% | 1937.15 | 48.31 | 41.32 | 16.88 | 23.07 | 14.07 | 36.51 |
| AMAT Applied Materials Inc |
24.19 4.08% | 617.11 | 40.44 | 36.23 | 11.09 | 14.41 | 11.04 | 30.52 |
| ADTTF Advantest Corporation |
- -% | 150.42 | 78.05 | 44.84 | 0.12 | 29.94 | 19.93 | 49.55 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on February 6, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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