FormFactor Inc. (FORM) increased its guidance for the second quarter of 2014. Following the news, shares jumped 8.17% in after-hours trade.
The company now expects sales of $65.0 to $69.0 million, higher than $62.0 to $66.0 million guided earlier. Non-GAAP gross margin is expected in the range of 34–37%, up from 31–34% expected earlier.
Management expects the demand from its customers in the System on Chip (SoC) and DRAM markets will now be stronger than prior expectations, helping revenue growth in the upcoming quarter.
Last month, the company witnessed strong momentum in the SoC business with escalating customer attention on its product solutions, including the copper pillar test solutions, mainly driven by mobile, industrial and automotive applications. It also made noteworthy progress in recovering from customer-specific DRAM problem that it faced in 2013. These developments will enable FormFactor to both re-engage with consumers and initiate new technologies into its operational practices.
FormFactor is an original equipment manufacturer of wafer probe cards used by semiconductor makers to test integrated circuits. The company posted better-than-expected fiscal first-quarter 2014 results with the top line surpassing the Zacks Consensus Estimate but the bottom line missing the same. Revenues of $56.0 billion were up 15.3% sequentially and 6.3% year over year. Pro-forma net loss was $4.8 million compared with a loss of $9.9 million in the year-ago quarter.
We believe that FormFactor has the product pipeline and cost structure to register robust demand growth in all the markets and profitability, going forward.
Currently, FormFactor has a Zacks Rank #2 (Buy). Stocks that have been performing well and are worth considering include Universal Electronics (UEIC), Applied Micro Circuits Corporation (AMCC) and Exar Corp. (EXAR). All these stocks sport a Zacks Rank #1 (Strong Buy).