Bear of the Day: FormFactor (FORM)

Group 1 - FormFactor is a $2.5 billion OEM specializing in automated wafer probe cards and testing devices for semiconductor manufacturing [1] - The company reported revenues of$ 763.6 million in 2024, with SK Hynix contributing 22% to the top-line [2] - Sales consensus for 2025 is projected to grow only 1.2% to $773 million, following a disappointing Q4 report [2] Group 2 - Analysts have reduced EPS estimates for 2025 by over 20%, from$ 1.63 to $1.26, indicating a slip below 10% annual growth [2] - FormFactor's probe cards are essential for testing various semiconductor devices, including SoCs, microprocessors, and memory types [4] - The company is facing challenges due to weaker demand in high-volume markets like client PCs and mobile handsets [6] Group 3 - For Q1 2025, FormFactor expects revenues of$ 170 million, which is about $20 million below prior consensus estimates [6] - The company anticipates a non-GAAP gross margin of 38% for Q1 2025 [6] - Non-GAAP earnings per share are expected to be 19 cents, down from prior estimates of 33 cents [7] Group 4 - FormFactor's manufacturing locations in Asia primarily drive its revenue, although North America has seen growth due to increased manufacturing activity [7] - The current growth slump in the semiconductor testing market suggests caution for investors, as the stock trades over 25X EPS [8] - The upcoming quarters will be critical in determining if a turnaround is possible for the company [8]