Cree, Inc. (NASDAQ:CREE) Beaten Down As Earnings Disappoint

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Investors were not happy with LED lighting maker Cree, Inc. (NASDAQ:CREE)’s earnings report for the first quarter of fiscal 2017, and marked down its shares by 11.07% on Wednesday.

The stock closed at $22.41 after trading 11.27 million shares, much higher than the average volume of 991.71K shares.

Cree, Inc. (NASDAQ:CREE) during FQ1

Cree reported FQ1 EPS of $0.09, which missed by $0.02 and revenue of $321 million which missed by $1.77 million and was down by 15.7% year-on-year.

For the second quarter, Cree expects revenue in the range of $360 million-$380 million, net income in the range of $30 million-$90 million and EPS of $0.13-$0.19.

Despite the miss on expectations, Chuck Swoboda, Chairman & CEO said: “We delivered solid results in fiscal Q1, with total Company revenue the upper half of our target range at $371 million, with non-GAAP net income of $15 million or $0.15 per share. Lighting, LED and Wolfspeed all delivered revenue and gross margin that were in line with our targets, while operating expenses were lower than targeted.”

Analysts turned downbeat on Cree, Inc. (NASDAQ:CREE)

UBS analysts are maintaining a sell rating on the company’s shares. Deutsche bank continued its Hold rating, but chopped its price target to $22 from $26.

Stephens lowered their rating on Cree from Overweight to Equal Weight and a price target from $35-$25, citing issues with the company’s ERP system.

Analysts at Needham & Co reaffirmed their Hold rating on the shares, citing the absence of meaningful M&A on the horizon, the competitive environment and no near-term catalysts.

Oppenheimer reiterated their Perform rating on the stock, while Roth Capital has a Buy rating and a price target of $34.

Technically, on the weekly chart, the stock has made a pattern of a descending triangle and if the $20 – $22 support range is decisively broken on a closing basis, the stock could see more downside in the near future.

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