Q2 Preview: Following Tough 2011, Analysts Optimistic on Cree (CREE)
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Price: $79.12 --0%
Rating Summary:
9 Buy, 22 Hold, 8 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 14 | Down: 13 | New: 16
Rating Summary:
9 Buy, 22 Hold, 8 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 14 | Down: 13 | New: 16
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Shares of Cree (Nasdaq: CREE) are trading up over 3.4 percent Tuesday as the company is expected to report its second-quarter earnings this afternoon following the closing bell. Management has a conference call scheduled for 5:00 pm ET.
The Wall Street consensus for Cree is $0.26 per share in earnings on $309.85 million in sales. During the second quarter of last year, the company reported earnings of $0.55 per share on $256.98 million in total sales. The company’s guidance calls for earnings of $0.25 to $0.28 per share on $300 to $320 million in sales.
For the full year 2012, analysts on the Street are currently estimating $1.17 per share in earnings on $1.25 billion in total sales.
According to data from Bloomberg, Cree shares have 21 Buy ratings from analysts, eight Hold ratings, and six Sell ratings. The average price target on shares of CREE is $34.50 with a range from $20 to $51.
Analyst Comments:
Goldman Sachs is reaffirming its Buy rating and $32 price target on Cree ahead of earnings as the firm believes the company offers better risk/reward opportunities than some of its peers. “Fundamentally, we believe Cree is now on the right side of the LED cycle as component oversupply issues move into the rear-view mirror and investor focus gravitates toward the secular opportunity in lighting. On this front, we see Cree’s acquisition-driven push into downstream lighting emerging as a misunderstood, but highly favorable catalyst for the stock in 2012. We expect visibility into accelerating adoption trends in LED lighting and better-than-expected margin leverage to drive a healthy reset in expectations which remain sharply divided, if not negative,”
For the quarter, Goldman estimates EPS of $0.26 on $309 million in sales.
JPMorgan is extremely bullish on shares of Cree with its $48 price target and Overweight rating. For the quarter, the firm expects results will fall inline with management’s previous guidance as first-quarter guidance should indicate incremental improvements in business conditions. The firm estimates EPS of $0.18 for the quarter.
An analyst at JPMorgan said, “Although we generally expect the LED industry to recover in 2012, we expect pricing and demand for Cree’s LED chips to remain weak in C1H12 as we expect a continued oversupply of lower-performing LEDs for at least the next 6 months. RF/power device-related sales, which are heavily reliant on renewable energy development, are also likely to remain a headwind.”
Back on January 12, Kaufman Bros. upgraded its rating on shares of Cree from Sell to Hold as market checks showed an improvement in volume and pricing. For the quarter, the firm estimates EPS of $0.13 on $310 million in sales.
“We continue to express concern over competition going forward despite our view that CREE is a technology leader. Importantly, we expect earnings to rise modestly after F2Q12 as cost reductions take effect; however, we forecast a 25% decline in profitability as compared to F2011,” a Kaufman analyst said.
Kaufman forecasts 30 percent top-line growth over fiscal 2012 due to an uptick in volumes and acquisitions.
The firm also raised its price target on Cree back on January 12 from $19 to $24 based on its new outlook.
KeyBanc believes patient investors should accumulate shares of Cree ahead of earnings. The firm anticipates the Street’s estimates will lower following the release, but not as much as the market is already factoring in. For the quarter, the firm estimates EPS of $0.18 on 37-38 percent gross margin.
“We believe the March 2012 quarter will represent the low-water mark for gross margins and EPS, which should drive outperformance later in the year.” The firm has a Buy rating and $37 price target on the shares.
Analysts at Cantor Fitzgerald are seemingly the most bullish going into the quarter’s results with a Buy rating and $51 price target. "We are becoming more comfortable that 2012 will mark the beginning of a positive uptrend for mass adoption of solid state lighting. We continue to find that improvements in efficiency coupled with price drops are enabling incremental applications. We also believe that 2011 was characterized by too much inventory in the channel with only moderate demand.”
For the quarter, the firm estimates EPS of $0.28 on $320 million in sales.
The Wall Street consensus for Cree is $0.26 per share in earnings on $309.85 million in sales. During the second quarter of last year, the company reported earnings of $0.55 per share on $256.98 million in total sales. The company’s guidance calls for earnings of $0.25 to $0.28 per share on $300 to $320 million in sales.
For the full year 2012, analysts on the Street are currently estimating $1.17 per share in earnings on $1.25 billion in total sales.
According to data from Bloomberg, Cree shares have 21 Buy ratings from analysts, eight Hold ratings, and six Sell ratings. The average price target on shares of CREE is $34.50 with a range from $20 to $51.
Analyst Comments:
Goldman Sachs is reaffirming its Buy rating and $32 price target on Cree ahead of earnings as the firm believes the company offers better risk/reward opportunities than some of its peers. “Fundamentally, we believe Cree is now on the right side of the LED cycle as component oversupply issues move into the rear-view mirror and investor focus gravitates toward the secular opportunity in lighting. On this front, we see Cree’s acquisition-driven push into downstream lighting emerging as a misunderstood, but highly favorable catalyst for the stock in 2012. We expect visibility into accelerating adoption trends in LED lighting and better-than-expected margin leverage to drive a healthy reset in expectations which remain sharply divided, if not negative,”
For the quarter, Goldman estimates EPS of $0.26 on $309 million in sales.
JPMorgan is extremely bullish on shares of Cree with its $48 price target and Overweight rating. For the quarter, the firm expects results will fall inline with management’s previous guidance as first-quarter guidance should indicate incremental improvements in business conditions. The firm estimates EPS of $0.18 for the quarter.
An analyst at JPMorgan said, “Although we generally expect the LED industry to recover in 2012, we expect pricing and demand for Cree’s LED chips to remain weak in C1H12 as we expect a continued oversupply of lower-performing LEDs for at least the next 6 months. RF/power device-related sales, which are heavily reliant on renewable energy development, are also likely to remain a headwind.”
Back on January 12, Kaufman Bros. upgraded its rating on shares of Cree from Sell to Hold as market checks showed an improvement in volume and pricing. For the quarter, the firm estimates EPS of $0.13 on $310 million in sales.
“We continue to express concern over competition going forward despite our view that CREE is a technology leader. Importantly, we expect earnings to rise modestly after F2Q12 as cost reductions take effect; however, we forecast a 25% decline in profitability as compared to F2011,” a Kaufman analyst said.
Kaufman forecasts 30 percent top-line growth over fiscal 2012 due to an uptick in volumes and acquisitions.
The firm also raised its price target on Cree back on January 12 from $19 to $24 based on its new outlook.
KeyBanc believes patient investors should accumulate shares of Cree ahead of earnings. The firm anticipates the Street’s estimates will lower following the release, but not as much as the market is already factoring in. For the quarter, the firm estimates EPS of $0.18 on 37-38 percent gross margin.
“We believe the March 2012 quarter will represent the low-water mark for gross margins and EPS, which should drive outperformance later in the year.” The firm has a Buy rating and $37 price target on the shares.
Analysts at Cantor Fitzgerald are seemingly the most bullish going into the quarter’s results with a Buy rating and $51 price target. "We are becoming more comfortable that 2012 will mark the beginning of a positive uptrend for mass adoption of solid state lighting. We continue to find that improvements in efficiency coupled with price drops are enabling incremental applications. We also believe that 2011 was characterized by too much inventory in the channel with only moderate demand.”
For the quarter, the firm estimates EPS of $0.28 on $320 million in sales.
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