What Happened?
Shares of semiconductor testing company FormFactor (NASDAQ: FORM) fell 3.2% in the morning session after Citigroup downgraded the stock to 'Neutral' from 'Buy' and lowered its price target. The downgrade came from Citigroup analyst Elizabeth Sun, who also lowered the price target for FormFactor to $31.00 from $36.00. This nearly 14% reduction in the price target reflects the analyst's updated and more cautious expectations for the company's market performance. A downgrade from a major financial institution like Citigroup can influence investor sentiment, as it suggests a reassessment of the stock's potential upside in the near term, leading to selling pressure.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy FormFactor? Access our full analysis report here, it’s free.
What Is The Market Telling Us
FormFactor’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 3% on the news that the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners.
A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
FormFactor is down 37.1% since the beginning of the year, and at $27.83 per share, it is trading 45.9% below its 52-week high of $51.41 from August 2024. Investors who bought $1,000 worth of FormFactor’s shares 5 years ago would now be looking at an investment worth $1,003.
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