UPDATE: BofA Securities Starts Cree (CREE) at Buy on Substrate Supplier Rev Streams for EV and 5G
(Updated - March 1, 2021 7:38 AM EST)
BofA Securities initiates coverage on Cree (NASDAQ: CREE) with a Buy rating and a price target of $140.00 noting that the company has 60%+ share in substrates for Silicon Carbide (SiC) – the next-gen material driving efficient power conversion in battery powered EVs and charging infrastructure. Additionally, Cree’s exposure to Gallium Nitride (GaN) materials/devices provides strong growth in 5G base station and industrial markets.
The analyst stated "we forecast sales to grow at a 40%+ CAGR to $1.3bn by CY23 (from $0.5bn currently), with pf-EPS breakeven by 2H22 and l-t EPS power of $3+. We estimate every incremental 1% penetration of BEVs adds $100-$150mn in TAM (+4% in sales/pf-EPS) incremental to our CY23 model. Our $140 PO is based on 11x CY23 EV/S, slightly above comparable tech stocks with unique moats but justified given growth prospects."
Shares of Cree closed at $113.46 yesterday.
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