Oppenheimer Maintains Perform Rating Following Announcements made by Cree (CREE)

Oppenheimer reiterates a Perform rating on Cree (NASDAQ: CREE) following several announcements. CREE announced lower than expected FY16 guidance and a new $500M share buyback plan. CREE also blamed an industry-wide worse-than-expected LED pricing pressure for struggles.

Analyst Andrew Uerkwitz commented, "Today, June 24th, CREE announced several things: FY16 guidance (lower than expected); a terrible pricing environment in its chip segment (4QFY15 guidance miss); a restructuring plan (lowering capacity and operating efficiencies); and new share buyback ($500M). CREE is blaming LED industry-wide worse-than-expected pricing pressure. Details: CREE announced that it approved another $500M buyback plan and disclosed FY16 revenue target of $1,800M (lower than Street's $1,885M and our $1,909M. Management expectation is unchanged for CREE's other segments. As a result of reduced expenses, management anticipates operating margin to increase in FY16 to 8%. Given the lack of visibility and timing of the bottom, we reiterate Perform."

Uerkwitz also added, "Management guided F4Q revenues at $375M and declining gross margin. FY16 revenues/operating margin are guided at $1,800M/8%. We adjust our F4Q15 and FY16 revenues/EPS from $437M/$0.26 and $1,909M/$1.20 to $376M/$0.08 and $1,790M/$1.09, respectively."

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 $30.56 yesterday.

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