Wolfspeed (WOLF) PT Lowered to $25 at Deutsche Bank

Deutsche Bank analyst Robert Sanders lowered the price target on Wolfspeed (NYSE: WOLF) to $25.00 (from $30.00) while maintaining a Hold rating.

The analyst comments "Wolfspeed guided softly for the June quarter (FY-Q4) mainly on industrial and energy (I&E) softness, which also led to a disappointing guide (non-GAAP gross margin guide of 12% at mid-point). The wider divergence between auto BEV margins and I&E margins across the SiC power portfolio is perhaps larger than most investors realised, and is explained by auto having a longer factory setup, more inspection steps and larger dies with lower yields. We also suspect that in auto, Wolfspeed may have committed to some larger, strategic contracts with aggressive KGD (known good die) terms, which may have anticipated both cost efficiencies from the 200mm transition and yield learning that was over-optimistic. The upshot is that until I&E returns, the mix of the initial ramp of Mohawk to 20% utilization is likely to be skewed to automotive (>90%), which is also set to delay the $100m/Q sales milestone by one quarter to March 2025. The good news at least is that die costs at Mohawk are now better than equivalent dies being produced in Durham, even including the burden of the under-utilization charge of $30m in Q3."

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