Disclosures

FormFactor Inc.

I, Craig A. Ellis , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • B. Riley & Co., LLC, or any of its affiliates, has received compensation from this company in the past 12 months.
  • This company currently is, or within the past 12 months was, a client of B. Riley & Co., LLC. The services provided were Non-Investment Banking Securities-Related Services.
Disclosure Chart

Initiated Coverage on 12/13/2013 with a Neutral Rating and Price Target of $6.00

Ratings Distribution as of April 28, 2017
Rating Number of Companies Percent of Total Number of Companies with
Investment Banking Relationships
Percent of Total
Buy 161 67.4% 25 10.5%
Neutral 77 32.2% 0 0.0%
Sell 1 0.4% 0 0.0%
Total 239 100% 25 10.5%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Acquisition/Integration - The Company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
  • Acquisition/Integration - The Company recently completed acquisition(s). If the Company fails to successfully integrate the acquisition, the deal may lead to disappointing returns.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Cyclical Nature of the Company's Business - Revenue from the Company's businesses have historically correlated positively with both US and world GDP. A cyclical downturn in GDP growth domestically and/or abroad may lead to a material deterioration in the Company's results.
  • Discretionary Spending - The products the Company sells are largely discretionary in nature and any slowdown in consumer spending would have an unfavorable impact on the Company.
  • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
  • Execution - Management may not execute well on its restructuring efforts as it allocates capital and human resources towards acquisitions and related integration, possibly resulting in lower margins and cash flow.
  • Financial Results - Any slow down or other changes in the capital spending pattern of the industry may negatively affect the Company's sales.
  • Financial Results - Due to the Company's relatively small revenue base and fixed operating cost structure, the loss or delay of one large license deal or services contract could significantly impact the bottom line.
  • Financial Results - The Company has a history of operating losses. Although the Company is focused on achieving profitability, there are no assurances that the Company will meet its goals or be able to sustain profitability in future periods.
  • Financial Results - Unpredictable timing of customer orders.
  • Growth Plan - There are many factors that may impact the company's ability to achieve its stated growth objectives.
  • Industry Change - The industry is subject to rapid technological change.
  • Inventory risk - Depending on market conditions, the Company's gross margins could come under pressure if market prices quickly fall within a three to five week time frame.
  • Manufacturer/Supplier Dependency - The Company relies on a few key manufacturers/suppliers. This lack of diversification could create interruptions in the Company's supply of products and a corresponding loss of revenues.
  • Natural Hazards - The Company's operations are located in an area prone to natural hazards. Damage to the area would impair the Company's ability to fill orders from customers and distributors.
  • Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
  • Seasonality - The Company's results are highly seasonal.
  • Sector Rotation - Despite the decline in valuations for small- and mid-cap bank stocks relative to a year ago, pricing multiples for small-cap banks remain high compared to the S&P 500. Accordingly, the trading price of the Company's common stock may be vulnerable to any sector rotation that might occur.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.