Shares of Cree, Inc. CREE plunged as much as 18 percent after the LED lighting firm cut its third quarter outlook. However, Stephens analyst Harsh Kumar is still buyers of the stock as it believes the issues arising from the ERP implementation and new product delays are behind them.
The company now sees third quarter non-GAAP EPS of $0.13 to $0.15 and revenue of approximately $367 million. Earlier, the company expected non-GAAP EPS of $0.22 to $0.29 and revenue in the range of $400 million to $430 million. Street's consensus estimate calls for earnings of $0.24 a share on revenue of $414.35 million.
"While the results are disappointing, we believe the majority of the shortfall is short term in nature. We believe these issues are largely behind CREE at this point," Kumar wrote in a note to clients.
"Given our belief that the issues are temporary, we would remain buyers of CREE and reiterate our $40 price target," he added.
Kumar revised his 2016 estimates following the company's pre-announcement. The analyst slashed FY16 non-GAAP EPS view to $0.82 from $1.07 and revenue forecast to $1.61 billion from $1.72 billion. Wall Street expects earnings of $1.03 a share on revenue of $1.72 billion.
Shares of Cree plummeted 14.63 percent to $24.80.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
