Alex A.C.
Value/GARP Investor, Semiconductor & Financial Analysis, Electronics MEng
FormFactor's 2030 target model implies either a still-high multiple in 2030 or disappointing share-price gains over the next few years. The model, cited via Citi and apparently management's own, targets $1.6B revenue, 55% gross margin and $5 EPS. The modeled TAM may prove higher, but a margin of safety means assuming today's high multiple won't stay as high. x.com x.com x.com x.comÂ
FormFactor is expensive against its earnings, trading at about 38x when chip-equipment makers usually get 18x. Fair value sits at $60.06 to $76.44, or 18x next year's $3.79 EPS give or take 12%, so at $145.97 the price is about 91% above fair. The valuation also leans on the forecast, with forward EPS 177% above trailing. This is a levels-only read off reported earnings and revenue estimates, with no fundamental work. x.comÂ
Broadcom has no material upside left even if it hits its 2029 targets, because the AI capex boom is nearing its peak and its 25x sales multiple, up from 5x before 2023, would reset to about 10x. Hyperscalers are at their limits: Alphabet sold shares to raise funds, Meta is considering it and Amazon issued bonds, so frequent upward capex revisions are unlikely and a re-rating is inevitable. Nvidia, at about 20x forward earnings and 9x sales, is the better semiconductor bet. x.comÂ
FormFactor is breaking out on record fundamentals. It posted three straight revenue records, a run rate above $1B and gross margin above 50% for the first time, and the shares rose 15% on the week. x.comÂ
FormFactor's rebounding free cash flow and operating margins suggest it is making the right moves in the tough, competitive chip-testing segment. Against ASML, the segment's beast, FormFactor has better growth and a 40% lower PEG. The chart is ready to move again, with a pattern target of 143 versus an all-time high around 160. x.com x.comÂ
