FORM - FormFactor stock tumbles 24% as geopolitical woes cyclical downturn weigh on outlook

FormFactor ( NASDAQ: FORM ) stock tumbled 24% to its lowest in over 30 months on Thursday after the wafer probe card maker issued Q4 guidance well below Street estimates to reflect  new U.S.-China trade restrictions, and cyclical weakness in memory and logic/RF demand.

Stifel downgraded the stock to Hold from Buy as it believes the upside case is more limited for now.

"This is an exceptionally challenging demand environment to navigate and we have concerns that the targets we envisioned the company achieving in CY23 could be delayed a few years," analyst Brian Chin said in a note to clients.

Stifel also cut its price target on FormFactor ( FORM ) to $30 from $37, implying 10.5% potential upside to its last close.

B. Riley cut its PT on the stock to $30 from $40, based on a 25x long-term target EPS of $2.

"We believe severe risk has significantly priced into shares, and while shares could be stuck in show me territory with range-bound action into Q1, from there, we believe catalysts exist to drive upside," said analyst Craig Ellis.

FormFactor ( FORM ) said it expects Q4 revenue of $155M-$150M vs. consensus estimate of $169.19M.

Q4 adj. EPS is projected to be $0.03, +/- $0.03, vs. consensus estimate of $0.28.

FormFactor's ( FORM ) Q3 results were largely in line with expectations, hurt by expected reduction in foundry & logic probe card demand.

To offset impact from weak demand, which is expected to extend well into next year, FormFactor ( FORM ) implemented operational restructuring during Q4, which will be completed by 2022-end.

This includes reducing ~13% of its workforce, mostly in the probe card segment and SG&A, CFO Shai Shahar said in an earnings call .

The restructuring is expected to reduce cost structure by $25M-$30M on an annual basis.

Shares of the company declined 51.5% YTD.

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