My iPhone is protected by password, is it possible for the thief to restore factory setting?
To restore a device using iTunes, iTunes itself requires an internet connection. Furthermore, the status of Find My iPhone is obtained from the device as well as Apple's servers—iTunes knows if the device you're attempting to restore has Find My iPhone enabled and will prevent the device from being restored. The only way to restore a device with Find My iPhone is to put it in Recovery/DFU mode, but then when the device is finished restoring, Activation Lock will be enabled when the device connects to Apple's servers which is required when setting up the phone.