FormFactor Inc

FormFactor, Inc. (NASDAQ: FORM) is a provider of test and measurement technologies. The Company designs, manufactures and sells multiple product lines, including probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems, and related services. It operates through two segments: Probe Cards and Systems.

Recent Financial and Business Updates:

• During this quarter, the company achieved quarterly revenues of USD 167.4 million, showing a slight increase of 0.9% compared to the fourth quarter of fiscal 2022 (USD 166.0 million). However, there was a decrease of 15.1% from the first quarter of fiscal 2022 (USD 197.2 million).
• The company surpassed its outlook range, with revenue, gross margins, and earnings per share (EPS) at the high end of their respective ranges. Notably, FormFactor saw significant sequential improvement in gross margins and profitability during the first quarter. This improvement was attributed to a notable increase in Foundry & Logic revenue, resulting from multiple wins with major foundry and IDM customers. Additionally, the Systems segment delivered strong results, achieving near-record revenue and gross margins.
• On a GAAP basis, net income for the first quarter of fiscal 2023 was USD 1.3 million, or USD 0.02 per fully-diluted share. This compares to a net loss of USD 13.7 million, or negative USD 0.18 per fully-diluted share, in the fourth quarter of fiscal 2022, and net income of USD 29.9 million, or USD 0.38 per fully-diluted share, in the first quarter of fiscal 2022. Gross margin for the first quarter of fiscal 2023 was 36.5%, compared to 27.2% in the fourth quarter of fiscal 2022 and 47.8% in the first quarter of fiscal 2022.
• On a non-GAAP basis, net income for the first quarter of fiscal 2023 was USD 12.5 million, or USD 0.16 per fully-diluted share, compared to net income of USD 4.1 million, or USD 0.05 per fully-diluted share, in the fourth quarter of fiscal 2022, and net income of USD 38.7 million, or USD 0.49 per fully-diluted share, in the first quarter of fiscal 2022. Non-GAAP gross margin for the first quarter of fiscal 2023 was 38.4%, compared to 31.7% in the fourth quarter of fiscal 2022 and 49.0% in the first quarter of fiscal 2022.

• The GAAP net cash provided by operating activities for the first quarter of fiscal 2023 was USD 12.3 million, compared to USD 20.7 million for the fourth quarter of fiscal 2022, and USD 44.2 million for the first quarter of fiscal 2022. Free cash flow for the first quarter of fiscal 2023 was negative USD 7.3 million, compared to negative USD 5.4 million for the fourth quarter of fiscal 2022, and USD 28.7 million for the first quarter of 2022.
  

Technical Observation (on the daily chart)

Currently, the stock is near an important resistance range of USD 36.00-USD 39.00, from where price has taken resistances in the past. The RSI (14 period) momentum indicator is at a value of 58.70, correcting from over bought levels, with expectations of some consolidation or a healthy correction before the continuation of the upward momentum. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to FormFactor, Inc. (NASDAQ: FORM) at the current price of USD 35.00 as of July 20, 2023, at 09:40 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

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 Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is 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. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

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. 

Resistance: 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. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 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. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is July 20, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.