Wolfspeed (WOLF) Stock Surges 20% on Strong Revenue Guidance, Analysts Raise PTs

August 18, 2022 7:19 AM EDT
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Price: $111.31 --0%

Rating Summary:
    7 Buy, 1 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 4 | Down: 6 | New: 14
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Shares of Wolfspeed (NYSE: WOLF) are up over 22% after the chip company reported strong results and offered better-than-expected guidance.

Wolfspeed reported an adjusted loss per share of $0.02, much better than the expected loss per share of $0.10. Revenue came in at $228.5 million, again better than the $207.9 million consensus.

For this quarter, Wolfspeed sees revenues between $232.5 million and $247.5 million, easily ahead of the $225.8 million consensus. The adjusted loss per share is seen between 2.0c and 8.0c, while analysts expected a loss per share of 7.5c.

Citi analyst Amanda Scarnati raised the price target to $115 from $85.

“The strength in the design ins and conversion to design wins should help to ease some investor concerns around the competitive environment… We maintain our Buy rating on WOLF and continue to view them as best positioned to capitalize on the rapidly growing SiC market,” Scarnati said.

Morgan Stanley analyst Joseph Moore was also positive on the design win, but noted that WOLF remains a “polarizing stock.” Moore also hiked the price target as he went from $101 to $106.

“The big surprise in the quarter for us was a $2.6bn quarterly design-in announcement, which would be a new record for the company and reflect over 60% upside to the most recent quarterly record, last quarter. We believe the design activity is real, but it will not have much impact on our revenue model for the next 18 months, as the opportunities are mostly 2025 and beyond, and the capacity to enable such strong upside is in the process of being ramped,” Moore wrote in a note.

The analyst remains Equal Weight-rated as “the [Silicon Carbide] ecosystem is still developing, and market conditions remain dynamic.”

By Senad Karaahmetovic

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