UPDATE: Sterne Agee Maintains Buy on Cree, Says March Quarter Estimates Are Too High
In a report published Tuesday, Sterne Agee analyst John Shen maintained a Buy rating on Cree, Inc. (NASDAQ: CREE), with a $72.00 price target.
According to the report, while in-line revenue and EPS for the Dec Qtr are expected, analysts believe consensus estimates for the March quarter are too high and do not adequately reflect seasonality for the components business and the outdoor lighting business. Beyond March quarter seasonality, analysts feel comfortable with low- to mid-teens revenue growth for CY14.
“LED Products is 56% of total and is typically down Q/Q as a result of Chinese New Year,” the report noted. “We estimate 50% of LED Products is shipped within China. Over the past five years, LED Products revenue is down 5% Q/Q on average. Lighting Products is 38% of total and is typically down Q/Q as a result of a slowdown in outdoor installations in the winter. We estimate 50% of Lighting Products is for outdoor (street lights, parking lot lights, tunnel lights, etc.), the rest of which is indoor lighting and LED bulbs. Since Cree acquired Ruud Lighting (and excluding the impact of Home Depot light bulbs in the Mar-13 Qtr), Lighting Products revenue is down 6% Q/Q on average. Over the past 7 years, Acuity's Feb Qtr revenue is down 5% Q/Q on average.”
CREE closed Monday at $62.71 with shares trading up at 2.76 percent.
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