FormFactor (NASDAQ:FORM) Shares Gap Down - What's Next?

Key Points

• FormFactor shares fell sharply, opening at $101.80 versus a prior close of $110.31, despite record third-quarter revenue of $280.5 million and adjusted EPS of $1.04, both above analyst expectations.
• Results showed significant operating improvement, including a 54.7% gross margin, $104.3 million in operating cash flow and strong demand across Foundry & Logic, systems and co-packaged optics.
• Investor concerns centered on fourth-quarter guidance, with projected GAAP EPS of $0.84 below third-quarter results, the stock’s elevated valuation near 69 times earnings and recent insider selling. Analysts nevertheless maintain a “Moderate Buy” consensus with an average price target of $131.83.

Shares of FormFactor, Inc. (NASDAQ:FORM - Get Free Report) gapped down before the market opened on Thursday. The stock had previously closed at $110.31, but opened at $101.80. FormFactor shares last traded at $100.5430, with a volume of 395,846 shares trading hands.

Key FormFactor News

Here are the key news stories impacting FormFactor this week:

• Positive Sentiment: FormFactor reported record third-quarter revenue of $280.5 million, up 38.4% year over year and 8.6% sequentially. Adjusted EPS was $1.04, exceeding the $0.86 consensus estimate, while revenue also topped expectations. FormFactor Surpasses Q3 Earnings and Revenue Estimates
• Positive Sentiment: GAAP results also improved sharply: diluted EPS rose to $0.93 from $0.20 a year earlier, gross margin expanded to 54.7% from 39.8%, and operating cash flow increased to $104.3 million from $27.0 million. Growth was supported by Foundry & Logic, Systems, and co-packaged optics demand. FormFactor Reports 2026 Third Quarter Results
• Positive Sentiment: Management said broad-based demand remains strong and outlined a potential $400 million annual probe-card capacity exit rate by 2027 as its Farmers Branch facility ramps, supporting the longer-term semiconductor and AI-related growth outlook. FormFactor Outlines Probe Card Capacity Expansion
• Neutral Sentiment: FormFactor forecast fourth-quarter revenue of approximately $285 million, plus or minus $10 million. While this implies continued growth, investors may have expected a larger outlook increase after the third-quarter beat.
• Negative Sentiment: Fourth-quarter GAAP diluted EPS guidance of $0.84, plus or minus $0.09, is below the third quarter’s $0.93, potentially raising concerns about sequential earnings pressure despite solid revenue expectations.
• Negative Sentiment: The stock’s elevated valuation—about 69 times earnings—left little room for disappointment, and the shares fell after hours despite the strong results. Reports also noted substantial insider selling, including sales by CEO Mike Slessor, which may have added to investor caution.

Wall Street Analysts Forecast Growth

A number of equities research analysts have issued reports on the company. Stifel Nicolaus set a $115.00 price target on FormFactor in a research note on Tuesday, October 13th. Deutsche Bank Aktiengesellschaft started coverage on FormFactor in a report on Wednesday, September 30th. They issued a "buy" rating and a $200.00 price target on the stock. Evercore set a $150.00 price objective on shares of FormFactor in a research report on Thursday, July 30th. Cantor Fitzgerald restated an "overweight" rating on shares of FormFactor in a research report on Tuesday, September 22nd. Finally, B. Riley Financial reiterated a "buy" rating on shares of FormFactor in a report on Monday, October 19th. Seven equities research analysts have rated the stock with a Buy rating and five have issued a Hold rating to the company's stock. Based on data from MarketBeat.com, the company currently has an average rating of "Moderate Buy" and an average price target of $131.83.

FormFactor Stock Performance

The company has a debt-to-equity ratio of 0.01, a current ratio of 4.08 and a quick ratio of 3.34. The business has a 50-day moving average of $117.16 and a 200-day moving average of $113.21. The company has a market capitalization of $7.91 billion, a P/E ratio of 69.35 and a beta of 1.18.

FormFactor (NASDAQ:FORM - Get Free Report) last released its quarterly earnings results on Wednesday, October 28th. The semiconductor company reported $1.04 EPS for the quarter, topping analysts' consensus estimates of $0.86 by $0.18. The firm had revenue of $280.55 million during the quarter, compared to analysts' expectations of $270.52 million. FormFactor had a net margin of 12.80% and a return on equity of 13.44%. The firm's revenue for the quarter was up 38.4% compared to the same quarter last year. During the same period in the previous year, the company earned $0.33 EPS. On average, sell-side analysts anticipate that FormFactor, Inc. will post 2.70 EPS for the current year.

Insider Buying and Selling at FormFactor

In other news, CEO Mike Slessor sold 11,098 shares of the stock in a transaction that occurred on Wednesday, October 14th. The shares were sold at an average price of $125.20, for a total transaction of $1,389,469.60. Following the transaction, the chief executive officer directly owned 455,596 shares in the company, valued at approximately $57,040,619.20. This trade represents a 2.38% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Kelley Steven-Waiss sold 2,100 shares of the business's stock in a transaction dated Thursday, September 3rd. The stock was sold at an average price of $96.10, for a total transaction of $201,810.00. Following the completion of the transaction, the director owned 24,426 shares of the company's stock, valued at $2,347,338.60. This represents a 7.92% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders sold a total of 46,710 shares of company stock valued at $5,520,564 over the last quarter. Company insiders own 0.79% of the company's stock.

Institutional Trading of FormFactor

Institutional investors have recently made changes to their positions in the business. BlackRock Inc. acquired a new position in FormFactor during the second quarter valued at $1,676,772,000. Andar Capital Management HK Ltd acquired a new stake in FormFactor during the 2nd quarter worth about $27,000,000. Bank of America Corp DE acquired a new stake in FormFactor during the 2nd quarter worth about $285,257,000. Primecap Management Co. CA acquired a new stake in FormFactor during the 2nd quarter worth about $270,300,000. Finally, Bank of New York Mellon Corp purchased a new position in shares of FormFactor during the 2nd quarter valued at about $103,844,000. Institutional investors and hedge funds own 98.76% of the company's stock.

About FormFactor

FormFactor, Inc is a semiconductor test and measurement company that designs and manufactures equipment and components used to evaluate integrated circuits during the wafer fabrication and production process. Its products help semiconductor manufacturers and suppliers measure electrical performance, identify defects and improve the development and manufacturing of advanced chips.

The company's portfolio includes probe cards used for wafer-level testing, as well as probe stations, analytical systems and related accessories for semiconductor engineering and production applications.

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