--> CREE is +2.5% in the premarket.
Cree: Color on Quarter
- Stifel notes Cree reported largely in-line results for the quarter when we back out a one-time tax gain. Guidance for the March quarter was wide with the mid-point below consensus. They see minimal near-term leverage and they need to see June play out (new bulb customers, lower ASPs introduced, heavy marketing spend and no seasonal impacts) to get more comfortable with the story, thus they reiterate their Hold rating.
- Needham notes Cree delivered a strong F2Q14 report but provided seasonally softer guidance that is below consensus. Given the strong secular trend coupled with its momentum in light bulbs and fixtures, they have no reason to believe Cree will not deliver another year of strong growth. On the other hand, capacity constraints are limiting sales of higher-margin LED components, and they believe a mix shift toward more bulbs will continue to prevent gross margin expansion in the next few quarters. They are incrementally more constructive on Cree based on its strong business momentum in LED lighting, but view the stock as fairly valued trading at a CY15E P/E of 29x.
- DA Davidson is raising their tg to $66 from $65; although they expect CREE will maintain its dominant position in the growing LED general lighting market, they are concerned that muted margins will offset top line improvements. With margin concerns overshadowing unit growth we continue to remain on the sidelines.