On May 6 2013, we upgraded semiconductor wafer probe card
), to Outperform based on its impressive first-quarter results
and improving prospects.
Why the Upgrade?
The company's first-quarter 2013 loss came in at 18 cents,
well below the Zacks Consensus Estimate of a loss of 26 cents per
share. Revenues increased 10.4% sequentially and 51.2% from the
year-ago quarter to $52.6 million. Over the past four quarters,
FormFactor has delivered an average surprise of 27.9%.
Following the release of the first quarter results, the Zacks
Consensus Estimate of a loss for 2013 has gone down 30.8% to 9
cents per share. Moreover, the Zacks Consensus Estimate for 2014
has gone from a loss of 7 cents to a profit of 8 cents up
What is the cause for the strong positive bias on the
Apart from the strong first-quarter results, FormFactor's
growth story looks compelling. FormFactor is a leading provider
of probe cards for semiconductor manufacturing. The company has
recently increased focus on probe cards targeting the mobile
segment, which is likely to grow in leaps and bounds, driven by
strength in the smartphone and tablet markets.
The MicroProbe acquisition helped the company add capabilities
in the SoC segment, which has grown faster than both the DRAM and
flash segments in the recent past. Formfactor is now seeing
increased momentum for copper pillar packaging, which requires
SOC probe cards specially built by Microprobe. We expect orders
to ramp up over the next few quarters.
Other Stocks to Consider
FormFactor carries a Zacks Rank #2 (Buy). Other semiconductor
stocks that are also worth considering include
Magnachip Semiconductor Corp.
Lam Research Corp.
), all carrying a Zacks Rank #2 (Buy).
FORMFACTOR INC (FORM): Free Stock Analysis
LAM RESEARCH (LRCX): Free Stock Analysis
MAGNACHIP SEMI (MX): Free Stock Analysis
STMICROELECTRON (STM): Free Stock Analysis
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