UPDATE: Piper Jaffray Reiterates Overweight Rating, Raises PT on Cree
In a report published Wednesday, Piper Jaffray & Co. reiterated its Overweight rating on Cree (NASDAQ: CREE), and raised its price target from $40.00 to $43.00.
Piper Jaffray noted, “We assume coverage of CREE with an Overweight rating and a $43 price target following F2Q13 earnings, as we see CREE as one of the best ways to play LED lighting in 2013. CREE reported F2Q13 revenue and non-GAAP EPS of $346m (cons. $331m) and $0.32 (cons. $0.30) with non-GAAP gross margins growing 180bps to 39.2%. The midpoint of F3Q13 guidance of $325-$345m and $0.30-$0.35 was well above consensus of $323m and $0.28. Our checks with North American lighting agents reveal 20-30% sales growth for the industry is likely while commercial LED penetration rates grow from 9% to 15%, a positive for CREE's lighting products segment (35% of sales). Longer term we expect CREE's chip and components segments to benefit from subsidy programs in Asia. ASP pressure is likely blunted by improved costs and product mix, helping gross margins to be sustainable. Our $43 PT is based on 22x CY13 EPS+ $7.47 in net cash.”
Cree closed on Tuesday at $33.47.
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