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Cree Brings Risks Back for All LED Players

Paul Ausick

Following a disappointing outlook offered on Tuesday night following a near-miss earnings report,  Cree Inc. (CREE) took several ratings hits today, but one firm kept the stock as a 'buy,' only cutting the price target.

Cree said it expects its first quarter 2014 revenues will total $380 to $400 million. The mid-point of that range was below the consensus estimate from Thomson Reuters of $399 million. Earnings per share were forecast in a range of $0.36 to $0.41, lower than the estimate of $0.43.

Analysts' opinions mostly turned south:

  • D.A. Davidson cut its rating from 'buy' to 'neutral' and lowered its price target from $79 to $65.
  • Northland Capital Partners cut its rating from 'outperform' to 'market perform' and lowered its price target from $63 to $61.
  • Needham & Co. maintained a 'buy' rating on the stock, but cut the target price from $80 to $74.
  • Susquehanna cut its rating from 'positive' to 'neutral'.
  • Sterne Agee kept its 'buy' rating on the stock, but lowered its price target.

Cree hit a 52-week high of $76.00 yesterday, right before posting its earnings. Even with today's slide, the stock is up more than 175% from its 2012 low. This morning we see Cree trading down more than 19% at about $61.04 in very active trading, against a 52-week range of $24.50 to $76.00.

The Most Oil-Rich States

Veeco Instruments Inc. (VECO) also competes in the LED space, and this one is up about 0.4% at $34.30 on thin volume trading. The stock's 52-week range is $26.15 to $43.18.

Aixtron SE (AIXG) is the European player here in the LED sector, and its shares have been very volatile and have not recovered the same as Cree. Aixtron ADRs are down 2%, at $17.07 against a 52-week range of $11.21 to $18.06.

Rubicon Technology Inc. (RBCN) is another player we like to feature despite its market cap being only $216 million. Rubicon shares are down 0.8% at $9.56 so far. The 52-week high is $10.77.

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