Cree Getting Mixed Reviews On Wall Street

Wall Street appears to have a mixed view of LED-maker Cree after the company reported a revenue beat on in-line earnings.

Here’s a breakdown of the report and what two firms have to say about the stock.

The Numbers

Cree’s quarterly revenue of $425.5 million came in ahead of consensus estimates of $418.6 million. In addition, reported EPS of $0.21 was slightly above consensus forecasts of $0.20.

Guidance for Q4 came in on the low side, however, as Cree called for revenue of $425-$445 million on earnings of $0.21 to $0.26. Consensus estimates had been for $445 million in revenue on earnings of $0.26, the extreme high end of the new guidance.

Stephens’ Take

Analyst Harsh Kumar believes investors should be taking advantage of the opportunity to load up on Cree’s stock. He stated management’s push to drive operating margin expansion is just what the company needs.

Related Link: Stephens Defends Cree Inc, Would Be Buyers With Expectations Of Improving Demand

“While the December quarter revenues were lighter than expectations, we continue to see solid demand for the Commercial Lighting business and some rebounds in the LED business, which are both positive signs,” he explained.

Stephens maintained its Overweight rating and $45 target for the stock.

Canaccord’s Take

Analyst Jed Dorsheimer is not quite so convinced of Cree’s direction. He believes that the company is still navigating a transitional period and that the recent quarter’s results indicate the stabilization point is still “in the distance.”

He praised the company’s increased focus on commercial lighting, but sees “few—if any—positive near-term catalysts.”

Canaccord maintained its Hold rating on Cree and raised its price target from $21 to $28.

Disclosure: The author holds no position in the stocks mentioned.