Canaccord Genuity Maintains a 'Buy' on Cree (CREE); Is Cree Resetting Expectations Or On A Slippery Slope?
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Price: $79.12 --0%
Rating Summary:
9 Buy, 22 Hold, 8 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
Rating Summary:
9 Buy, 22 Hold, 8 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
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Canaccord Genuity maintains a 'Buy' on Cree (NASDAQ: CREE) price target of $33.00.
Canaccord analyst, Jonathan Dorsheimer, said, "While we are disappointed with Cree’s results, our thesis remains unchanged. In fact, a reset of expectations is probably healthy, as 2012 Street expectations seemed too bullish. As a reminder, our favorable position is based on our thesis that as the industry oversupply is absorbed by BLU penetration exiting 2012 and growth returns to the LED industry in 2013 driven by SSL adoption, CREE will benefit and margins will expand with utilization increasing, leading to meaningful leverage."
"While CREE has certainly been a painful stock to hold for some, we feel the risk/reward remains favorable. We see trough earnings power at approximately $1.00, which we feel would garner a 10x multiple. Adding $6 per share in cash results in around a $16 valuation, or a 27% decline from aftermarket bids. Conversely, if we are right regarding the macro trends and CREE is able to capture the SSL growth and margin expansion results from utilization rates rising, we conservatively estimate $2.00 in earnings power, which we feel justifies a 20x multiple. Adding cash yields a $46 stock valuation, or 110% appreciation potential from current levels."
For an analyst ratings summary and ratings history on Cree click here. For more ratings news on Cree click here.
Shares of Cree closed at $23.33 yesterday.
Canaccord analyst, Jonathan Dorsheimer, said, "While we are disappointed with Cree’s results, our thesis remains unchanged. In fact, a reset of expectations is probably healthy, as 2012 Street expectations seemed too bullish. As a reminder, our favorable position is based on our thesis that as the industry oversupply is absorbed by BLU penetration exiting 2012 and growth returns to the LED industry in 2013 driven by SSL adoption, CREE will benefit and margins will expand with utilization increasing, leading to meaningful leverage."
"While CREE has certainly been a painful stock to hold for some, we feel the risk/reward remains favorable. We see trough earnings power at approximately $1.00, which we feel would garner a 10x multiple. Adding $6 per share in cash results in around a $16 valuation, or a 27% decline from aftermarket bids. Conversely, if we are right regarding the macro trends and CREE is able to capture the SSL growth and margin expansion results from utilization rates rising, we conservatively estimate $2.00 in earnings power, which we feel justifies a 20x multiple. Adding cash yields a $46 stock valuation, or 110% appreciation potential from current levels."
For an analyst ratings summary and ratings history on Cree click here. For more ratings news on Cree click here.
Shares of Cree closed at $23.33 yesterday.
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