Tuesday, September 26, 2006

Calls of Note Part 2

- Goldman Sachs is adding FormFactor (NASDAQ:FORM) to the Americas Investment Conviction List, as they see the recent pull back in the stock as an opportunity for relative and
absolute return investors to initiate long/overweight positions in the name. Firm believes the stock's recent underperformance has been driven by concerns regarding a slowdown in the DDR2 transition in Taiwan, which the market expects will have a negative impact on FormFactor's fundamentals in the near-term. They view the market's reaction as overly negative and continue to see 20% upside to $50 price target, as: 1) the end of the DDR2 transition was fully expected, and (2) they believe there are several factors that are continuing to drive positive business momentum for the company over the next several quarters, which are currently being overlooked by the market.

Firm expects FormFactor's upcoming earnings report to serve as a positive catalyst for the stock. While the Street currently expects 3QCY2006 results and/or 4QCY2006 guidance to be negatively impacted by the slowdown in DDR2 demand in Taiwan, they expect 3QCY2006 results to be in-line with expectations (estimates $95 mn in 3QCY2006 sales and $0.33 in EPS, including ESOs) and for 4QCY2006 guidance to be solid.

Notablecalls: Actionable call! FORM will see buy interest today. I see around 2 pts of upside by minimum

No comments: