Formfactor, Inc. (FORM) shares rose more than 8% after D. A. Davidson upgraded the stock to Buy and raised its price target to $30, which represents a premium of approximately 20% to the Friday’s closing price.
D. A. Davidson analyst Thomas Diffely finds that Formfactor is well-positioned to benefit from the extension of the COVID-19 resulted in a global recession given its exposure to key industry spenders and “minimal” the impact of the new Department of Commerce decisions. Diffely added that Formfactor could be a “key beneficiary” secular trends of the industry given its strong balance sheet.
Last month, the company has recorded a turnover which has increased from 21.6% to $160.75 million, beating consensus estimates by $20.82 million, and non-GAAP earnings of 33 cents per share, beating the consensus estimates of 12 cents per share.
Analysts were mixed on the name in the last few months. Cowen & Co. initiated coverage of Formfactor stock with a Market Perform rating and $23.00 price target at the end of April. Before you update the stock on June 1, D. A. Davidson downgraded Formfactor shares at the beginning of April, citing growth COVID-19 and uncertainties related to short-term supply problems.
From a technical point of view, Formfactor stock broke out from an ascending triangle pattern following an analyst upgrade. The relative strength index (RSI) remains neutral with a reading of 58.02, and the moving average convergence divergence (MACD) in histogram MACD continues to trend to stagnate. These indicators suggest that the stock has room to run in the coming sessions.
Traders should watch for a further breakout and move it to the reaction of the vertices of $27.61 during the next sessions. If the stock fails to close above trendline resistance, traders could see a movement lower towards the 50 and 200-day moving averages near $22.40. If the stock breaks out, traders could see a move to retest prior highs of close to $27.61 and $28.58.
The author holds no position in the stock(s) mentioned except through the passive management of index funds.