- Citigroup comments on FormFactor (NASDAQ:FORM) saying they believe recent competitor commentary echoes firm's downgrade ~2 weeks ago. As a reminder, their work suggests a ~1-3Q "pause" in fundamentals due to moderating demand for DRAM probe cards and heightened execution risk in ramping new pdcts (ex. recent NAND snafus at MU/IMFT).
While the firm acknowledges a recent order from Hynix, their work suggests it is no more than $5MM and is not fully incremental due to some lost business (MU).
Further, while FORM's competitive position remains strong, checks suggest MJC is now qualified for DRAM at Elpida + Powerchip (together ~1/3 of FORM revs in CQ2:06). While MJC remains capacity constrained, work suggests it plans to ramp capacity ~3X in the next 6mos.
They see these issues conspiring to, at the very least, break the string of + est revisions (they recently cut C2007 EPS) meaning this story goes from great to simply good for the next few Qs. Maintaisns Hold, will get more positive in mid-high $30's.
Notablecalls: Not actionable but good to know category.
While the firm acknowledges a recent order from Hynix, their work suggests it is no more than $5MM and is not fully incremental due to some lost business (MU).
Further, while FORM's competitive position remains strong, checks suggest MJC is now qualified for DRAM at Elpida + Powerchip (together ~1/3 of FORM revs in CQ2:06). While MJC remains capacity constrained, work suggests it plans to ramp capacity ~3X in the next 6mos.
They see these issues conspiring to, at the very least, break the string of + est revisions (they recently cut C2007 EPS) meaning this story goes from great to simply good for the next few Qs. Maintaisns Hold, will get more positive in mid-high $30's.
Notablecalls: Not actionable but good to know category.
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