FormFactor, Inc. (FORM): what the price assumes

In the published model solve dated 2026-Q2, anchored at $103.90, FormFactor, Inc. (FORM) is priced for today's economics sustained for ~26.0 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/FORM

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 12.9% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: n/a

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=16)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• A probe card is custom tooling built for one chip design, so revenue here tracks how many new designs enter test rather than how many chips ship, and the March quarter showed that split plainly: memory probe card revenue rose 69.7% year over year while the Systems business fell 19.9%.
• Three customers each supplied more than a tenth of March-quarter revenue and together 39.7% of it, SK hynix alone 29.5%, so one memory customer's tooling cycle moves the whole print.
• The June-quarter report lands July 29, 2026, and the restructuring plan adopted in January carries aggregate charges of 30 to 40 million dollars with the majority expected inside fiscal 2026, so the next two prints mix the demand read with the bill for consolidating two California plants.

Bull Case

Mature is the right word for the balance sheet and the wrong word for the revenue mix. FormFactor makes probe cards, the custom electrical interface that touches every die on a wafer during test, and each card is engineered to one customer's layout. The 10-K describes the work as adapting "our standard product architectures to meet each customer's specific wafer layouts, chip layouts, and electrical test requirements". Demand therefore follows new designs and node transitions rather than the raw count of chips shipped. When the industry changes what it builds, the order book moves before fab output does.

That mechanic is doing visible work. March-quarter revenue was 226.1 million dollars, up 32.0% on the year, and the composition moved more than the total did: DRAM probe cards rose 69.7% to 82.9 million dollars, Foundry and Logic rose 30.4% to 111.2 million dollars, and Systems fell 19.9% to 27.9 million dollars. The company ties the memory move to a specific product change, noting that "Increased demand for our DRAM probe card products, including those supporting HBM designs, contributed to the increase in revenues." High-bandwidth memory stacks more die and tests them harder. That raises the tooling content per wafer, not merely the number of wafers.

The mix change lands where it counts. Probe Cards turned 50.5% of its revenue into gross profit in the March quarter against 37.8% a year earlier, while Systems went the other way, 44.5% down to 38.0%. The segment that grew is also the segment that got more profitable, which is the opposite of the usual semiconductor equipment pattern where extra volume gets bought with discounts.

Why that can persist has to do with how the product is chosen. Listing what customers weigh, the 10-K names "customer service, knowledge of measurement techniques, custom design success, delivery time, price, probe card lifetime, chip damage prevention, probe tip touch-down accuracy, electrical signal speed and current carrying capability, number of chips contacted in parallel". Only one item on that list is cost. The rest are engineering properties that get qualified into a customer's test flow and then stay there for the life of the design, which is why a probe card supplier who wins a memory generation tends to hold it through the ramp.

The financing of all this is unusually quiet for the sector. FormFactor funds its own working capital, holds a net cash position, and has no borrowing worth discussing, so a downturn does not arrive as a refinancing problem. In fiscal 2025 interest income ran to 10.6 million dollars against a borrowing cost of half a million. A supplier to a cyclical industry that lends more than it borrows gets to keep spending through the trough, and in a business where the design win precedes the revenue by quarters, spending through the trough is how the next cycle gets won.

Bear Case

The share count has not moved since early 2022. That is the first thing to sit with, because it tells you where the cash has been going. A company with net cash and no debt service either shrinks its share base or it does not, and here the repurchases have bought back roughly what stock compensation issued. Holders got a steady count rather than a smaller one. That is a defensible choice, but it means the per-share arithmetic gets no help from capital return, and every dollar of value has to come from the operating business.

The operating business is meanwhile paying for two things at once. On January 5, 2026 management adopted plans to consolidate the Carlsbad and Baldwin Park manufacturing operations into other sites, with aggregate charges of 30 to 40 million dollars, primarily against the Probe Cards segment, and the majority expected inside fiscal 2026. The stated purpose is "to better align our cost structure and support gross margin improvement". In the same quarter a new operating expense line appeared: factory start-up costs of 7.1 million dollars. Closing plants and opening capacity in the same three months is what a company does when it is repositioning rather than harvesting, and the improvement is so far a target rather than a result.

Concentration compounds the timing risk. In the March quarter SK hynix supplied 29.5% of revenue, up from 23.3% a year earlier; NVIDIA supplied 10.2%; Intel, which was 12.0% a year earlier, dropped below the disclosure line. Two customers accounted for 26.1% and 13.3% of gross accounts receivable. That is a business whose quarter is decided in a handful of procurement meetings. The 10-K puts the swing factor bluntly in its list of what moves results, naming "changes, including delays or declines, in investment in artificial intelligence infrastructure" alongside the gain or loss of significant orders. The same filing notes that China fell from approximately 14% of fiscal 2024 revenue to approximately 7% of fiscal 2025 revenue, which is a reminder that a policy decision can remove a region from the addressable base faster than the sales cycle can replace it.

Then there is the cost of staying in front. Development here runs ahead of adoption by design, and the 10-K says what that means: "These expenses are often incurred in advance of customer adoption or other anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect." Spending early is the moat and the risk in the same line item.

All of which collides with what the quote already assumes. Every family of method run here lands below the current quote, and not narrowly. The forward-growth methods come closest and still leave a gap; the earnings-power and asset-based families sit an order of magnitude further down. So a buyer today is not betting that one conservative method understates a good business. They are betting on a stretch of compounding at close to the fastest rate this business can fund out of its own cash flow, held for far longer than any of those frames encode. Among companies that have grown that fast, only about one in seven kept the pace even a decade. If the memory cycle that produced the March quarter turns before that stretch is delivered, there is no second lever: the balance sheet cushions the fall without changing its direction.

Valuation

Start with where the methods finish. Asset-based approaches, earnings-power approaches, peer multiples and forward-growth models all land below the current share price, and the spread between them is the information. The forward-growth family gets nearest, which is the ordinary result for a company whose reported profit is depressed and expected to recover, and even there the price sits roughly 47% above where that family lands. The earnings-power family and the asset-based family sit an order of magnitude further below. No standard frame reaches the quote.

What the business actually earns explains why. In the March quarter FormFactor reported operating income of 16.6 million dollars on revenue of 226.1 million dollars, a 7.4% operating margin against 2.0% in the year-ago quarter. For fiscal 2025 as a whole, operating income was 57.1 million dollars, 7.2% of revenue. That last figure deserves a note of its own, because it is the first in the recent series that does not lean on a one-time gain. Fiscal 2024's 64.8 million dollars of operating income included a 20.6 million dollar gain on the sale of a business, and fiscal 2023's 82.8 million dollars included a 73.0 million dollar gain. Strip those gains out and the underlying operating profit has been climbing off a low base, which is a better story than the headline series tells, and still a single-digit result.

Against the cohort that is the low end. PLAB ran a 22.9% operating margin on 861.2 million dollars of revenue and CRUS ran 23.0% on 2.0 billion dollars, both on their own filed figures; AEIS, closer in end market, ran 10.8%. Only ICHR, at a small operating loss, sits below FormFactor. The peer-multiple methods land where they do because a single-digit margin does not buy a semiconductor multiple, and the earnings-power methods land lower still because they capitalize what is earned now rather than what the restructuring is aimed at.

So the concrete requirement is not a recovery to cohort-average profitability. It is that recovery plus persistence: compounding near the ceiling the business can self-fund, sustained across a span longer than the standard frames encode. Only about one in seven comparable fast growers held such a pace even a decade. The band behind that solve is wide enough that it should be read as a direction rather than a measurement, which is the honest way to carry it.

Underneath sits 291.1 million dollars of net cash and no borrowing worth the name, plus a share base that has been flat since early 2022. That combination bounds the downside and does nothing for the upside. It buys time for the plant consolidation and the memory mix to work. It does not buy the compounding the quote already assumes.

Catalysts

The next dated event is close. FormFactor reports June-quarter results on July 29, 2026. Two things in that print matter more than the headline: whether the memory mix that drove the March quarter held, since DRAM probe cards were the entire source of the year-over-year growth acceleration, and whether the Systems decline continued after a 19.9% drop. The March quarter was reported on April 29, 2026 with revenue and gross margin above the company's guidance.

The sell side moved during the intervening quarter, and it moved in one direction without reaching agreement. Craig-Hallum upgraded to Buy on May 12, 2026 with a 175 dollar target; Evercore ISI upgraded to Outperform on June 5, 2026 with a 155 dollar target; B. Riley upgraded to Buy on June 11, 2026 with a 165 dollar target. Over the same weeks Needham, Stifel, TD Cowen and Northland all kept Hold ratings. An even split between Buy and Hold after a record quarter is itself a statement about how much of the memory upcycle is already in the quote.

The cost program is the third thread and the only one with a filed timetable. The plan adopted January 5, 2026 consolidates the Carlsbad and Baldwin Park manufacturing operations into other facilities, with aggregate charges of 30 to 40 million dollars and the majority expected inside fiscal 2026. Factory start-up costs appeared as a separate expense line for the first time in the same quarter. Whether the gross margin improvement the plan targets shows up before the charges finish running is the question the next two reports answer.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• ICHR (Ichor Holdings, Ltd.)
• FY2025 10-K: …support future growth. In addition to providing high quality and reliable fluid delivery subsystems and components, one of our principal strategies is delivering lead-times that provide our customers with the required flexibility needed in their production processes. We have accomplished this by investing in scalable…
• FY2025 10-K: …devote greater resources to the development, promotion, sale and support of their products and services, and reduce prices to increase market share. In addition to organic growth by our competitors, there may be merger and acquisition activity among our competitors and potential competitors that may provide our…
• AEIS (ADVANCED ENERGY INDUSTRIES INC)
• FY2025 10-K: …operations, before income tax ​ 168.7 ​ 9.4 ​ ​ 52.4 ​ 3.5 ​ Income tax provision (benefit) ​ 19.4 ​ 1.1 ​ ​ (3.9) ​ (0.3) ​ Income from continuing operations ​ $ 149.3 ​ 8.3 % ​ $ 56.3 ​ 3.8 % ​ ​ 36 Table of Contents Revenue The following tables summarize net revenue and percentages of revenue by markets: ​ ​ ​ ​ ​…
• FY2025 10-K: …risks related to our reliance on our intellectual property. 8 Table of Contents Competition The markets we serve are highly competitive and characterized by rapid technological development and changing customer requirements. We face a wide variety of competitors, and no single company dominates any of our markets.…
• PLAB (PHOTRONICS, INC.)
• FY2025 10-K: …financial performance and business prospects. Competition The photomask industry is highly competitive, and most of our customers utilize multiple photomask suppliers. Our ability to compete depends primarily upon the consistency of our product quality, timeliness of delivery, competitive pricing, technical…
• FY2025 10-K: …customers accounted for an aggregate of 29%, 27% and 27%, respectively, of our revenue. Our five largest customers accounted for an aggregate of 50%, 50% and 51% of our revenue in 2025, 2024 and 2023, respectively. The loss of a significant customer, a significant reduction or delay in orders from any significant…
• OSIS (OSI SYSTEMS, INC.)
• FY2025 10-K: …trust. ​ 14. SEGMENT INFORMATION We operate in three identifiable industry segments: (a) security and inspection systems (Security division), (b) optoelectronic devices and manufacturing (Optoelectronics and Manufacturing division) and (c) medical monitoring systems (Healthcare division). Factors used to identify our…
• FY2025 10-K: …decision maker ("CODM"). Our Chief Executive Officer serves as the CODM. The CODM uses segment assets and segment income (loss) from operations, as well as the expenses within each segment including cost of sales, selling, general and administrative expenses and research and development expenses, to allocate…
• IPGP (IPG PHOTONICS CORP)
• FY2025 10-K: …harm our business. " and " Risk Factors - Our inability to protect our intellectual property and proprietary technologies could result in the unauthorized use of our technologies by third parties, hurt our competitive position and adversely affect our operating results ." Manufacturing Vertical integration is one of…
• FY2025 10-K: …and photovoltaic industries. Approximately 86% of our revenues in 2025 were from customers in the materials processing market. Although applications in this market are broad, sales for these applications are cyclical and have historically experienced sudden and severe downturns and periods of oversupply, resulting in…
• MRCY (MERCURY SYSTEMS, INC.)
• FY2025 10-K: 2024, we halted production for months on multiple secure computing programs due to a root cause analysis, materially affecting financial results and customer confidence. These challenges could recur in the future on other programs. Competition from existing or new companies could cause us to experience downward…
• FY2025 10-K: …product, where the customer evaluates alternative technologies and design approaches. We work with defense prime contractors as well as directly with the DoD. We help drive subsystem development and deployment in both classified and unclassified environments. The principal competitive factors in our market are…
• CRUS (Cirrus Logic, Inc.)
• FY2025 10-K: …deposits or if a depository institution is subject to other adverse conditions in the financial or credit markets, there is no guarantee that we have access to such uninsured deposits, which could restrict access to our cash or cash equivalents and could adversely impact our operating liquidity, financial condition,…
• FY2025 10-K: …ability to compete effectively and to expand our business will depend on our ability to continue to recruit key engineering talent, execute on new product developments, partner with customers to create compelling products for their applications and provide cost efficient versions of existing products. We compete with…
• SWKS (SKYWORKS SOLUTIONS, INC.)
• FY2025 10-K: …Also, this competition has resulted in, and is expected to continue to result in, declining average selling prices for many of our products and increased challenges in maintaining or increasing revenue, gross margin, and market share. Furthermore, additional competitors may enter our markets as a result of growth…
• FY2025 10-K: …future business activities. Uncertainty and economic weakness could result in a market contraction and, as a result, our business, results of operations, and financial condition would likely be materially and adversely affected. Such periods of industry downturn are characterized by diminished product demand and…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.