Stephens Defending Cree, Says It's Still Buying Despite Guidance Update
Shares of Cree, Inc. (NASDAQ: CREE) plunged as much as 18 percent after the LED lighting firm cut its third quarter outlook. However, Stephens analyst Harsh Kumar is still a buyer of the stock and believes the issues arising from the ERP implementation and new product delays are behind Cree.
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. Wall 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.
Latest Ratings for CREE
|Feb 2017||JMP Securities||Downgrades||Market Outperform||Market Perform|
|Dec 2016||JMP Securities||Initiates Coverage On||Market Outperform|
|Oct 2016||Stephens & Co.||Downgrades||Overweight||Equal-Weight|
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