Wall Street PR

Cree is No Deer in the Headlights (CREE)

The bright light investors saw coming down the tracks today belonged to a shining earnings report from Cree (NASDAQ: CREE). The maker of light emitting diode (LED) products earned $0.27 per share for the first quarter, which beat the consensus view of analysts by a penny. Revenues increased by 17% in a year-over-year comparison. The company also expects to earn between $0.27 and $0.31 per share in the second quarter. On average, analysts expect the company to earn $0.30 for the coming quarter. The company said its backlog of orders grew over the last three months and the future outlook remains somewhat cloudy due to uncertain economic conditions.

In the last week, several analysts had cut their price target on Cree shares. Cantor-Fitzgerald lowered its price on the stock by $4.00 and Susquehana cut its target to $36.00 from $40.00. Today, however, Maxim Group reissued its “buy” rating on the stock with a price target of $38.00. Also climbing on board were the analysts at Needham and Company, who raised the price target on Cree shares from $30.00 to $32.00. The average rating held by the 33 analysts covering the stock is “overweight”.

Despite warnings from Cree that the environment remains challenging for the industry, buyers queued up early to purchase shares. On the opening bell, Cree share prices gapped 8% higher than the closing price on Tuesday to begin the session at $28.26. The stock gave a bit of the gains back in the first 30 minutes of trading and shares retreated to an intraday low of $27.85. After digesting their lunch, buyers went on another shopping spree that sent the stock to a high trade of the day at $29.71. For the remainder of the afternoon, share prices drifted lower. As the curtain came down on the trading day, shares of Cree ended with a 10% gain to close up $2.73 at $28.92. The number of shares traded on the day totaled 8 million, which easily beat the average daily volume of 1.3 million shares.

Over the last 52-weeks, the stock has taken traders and investors for a roller-coaster ride. In December, the stock marked an annual bottom when shares traded for $20.25. From January through May, Cree shares marched 50% higher to a 12-month high of $33.45, even though Cree management lowered earnings guidance several times. The stock nearly surrendered all the gains it made during the spring by the time the calendar flipped to June. Share prices rallied through the summer spurred by the settlement of a patent suit involving SemiLeds, who made a one-time payment to Cree for damages. The terms of the damages remain confidential.

Besides producing LEDs, the company manufactures semiconductor material and devices. Cree’s lighting division produces both LEDs and traditional lighting products. The company sells indoor and outdoor lighting systems with a focus on commercial and industrial markets. Cree acquired Rudd lighting in August of 2011. The Durham, North Carolina-based company was founded in 1987.


Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).