Canaccord Genuity Trims PT on Cree (CREE) to $22; Continuing to Face Uphill Battle

August 17, 2016 9:45 AM EDT
Get Alerts CREE Hot Sheet
Price: $27.49 --0%

Rating Summary:
    12 Buy, 23 Hold, 5 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 15 | Down: 17 | New: 10
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Canaccord Genuity lowers it price target on Hold-rated Cree (Nasdaq: CREE) from $24 to $22 following Q2 results.

Analyst Jed Dorsheimer commented, Cree's sale of its Wolfspeed Power & RF segment will allow the company to focus on Cree 3.0, the company's initiative to become a more valuable LED lighting company. We continue to believe it will take some time for Cree to fully recover from weakness in commercial lighting. On the components side, while there have been some recent signs of pricing stabilization in the LED components market, it is too early to suggest a trend. With so few positive catalysts in sight and a difficult transition period underway, we maintain our HOLD rating and slightly lower our price target to $22 from $24.

Although we appreciate Cree's candid take on the market and the company's need to claw back wins in the lighting space (particularly in regards to channel access and project pipeline), the company is undoubtedly facing an uphill battle and we see no near-term relief. On the positive side, we could see an eventual recovery through M&A for channel access if management can prudently utilize the recently bolstered balance sheet, the analyst noted.

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