FormFactor stock rating upgraded by B.Riley on HBM strength

B.Riley upgraded FormFactor (FORM) to Buy, raising its price target to $47 from $34, driven by increased confidence in the company's ability to improve gross margins to a target of 47% through operational enhancements. The firm emphasized FormFactor's robust DRAM HBM market share, emerging opportunities in Foundry Logic with Nvidia and AMD, and established strengths with TSMC, benefiting from a probe card intensity tailwind amid 2nm C26 chip adoption. While FormFactor's recent Q2 2025 revenue of $195.8 million surpassed forecasts, EPS of $0.27 missed expectations, and the company announced Aric McKinnis as its new CFO.

Analysis

B.Riley upgraded FormFactor (FORM) to Buy, raising its price target to $47 from $34, a significant increase from its current $38.36. This upgrade stems from increased confidence in FormFactor's ability to improve gross margins to a target of 47% from the current 38.68% through operational enhancements. The company also maintains a strong current ratio of 4.24, indicating solid financial health.

FormFactor's strategic positioning is bolstered by robust DRAM HBM market share and emerging opportunities in Foundry Logic, including potential Nvidia share expansion and AMD program additions. The firm benefits from established strengths with TSMC across mobile platforms, anticipating a favorable probe card intensity tailwind from broad 2nm C26 chip adoption. Its growing incumbent advantage within Nvidia’s supply chain, driven by higher voltage capability technology, further strengthens its market position.

Recent Q2 2025 financial results were mixed, with revenue of $195.8 million surpassing the $190.17 million forecast, yet EPS of $0.27 missed the anticipated $0.30. Concurrently, FormFactor announced a leadership transition, appointing Aric McKinnis as the new SVP and CFO. These developments reflect ongoing adjustments as the company navigates the current fiscal landscape.

Key Decisions for Investors

• Investors should closely monitor FormFactor's progress in achieving its 47% gross margin target through operational improvements, as this is a key driver for the analyst upgrade and future profitability.
• Evaluate the company's execution in high-growth semiconductor segments, specifically its expanding engagements with Nvidia and AMD in Foundry Logic and its robust DRAM HBM market share.
• Assess the impact of the recent mixed Q2 2025 financial results, where revenue beat forecasts but EPS missed, alongside the implications of the new CFO appointment on future financial strategy and performance.