February 13, 2008

Buy Form Factor on the Dip

From Zacks:

"FormFactor (FORM) is the market leader in advanced wafer probe cards used to test semiconductor wafers during the manufacturing process. The combination of a very difficult pricing environment in DRAM and product execution problems have led to the shares being slammed.

The company has a very strong long-term growth profile. The company's technology is leveraged towards leading edge 300mm and sub-110nm nodes, which are ramping quickly throughout the industry. We envision a strong future for FORM, and consequently, are maintaining our BUY rating on the shares.

We feel the stock's sell off was overdone and investors with a time frame of at least two quarters should consider the purchase of the firm's shares. We believe that this stock should command a premium to other back-end semiconductor capital equipment manufacturer companies. Consequently, we are decreasing our price target to $30.00, which corresponds to a P/E multiple of 24.0x."

FORM is also a MF Hidden Gems pick. They were previously covered in this post.

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