Piper Jaffray reiterated a Neutral rating on Cree (NASDAQ: CREE), and raised the price target to $27.00 (from $26.00), following the company's 2Q earnings report and outlook. The most substantial departure from modeled estimates for F2Q fell on the tax line, where the R&D tax credit reinstatement added at least $0.05 to EPS.

Analyst Mike Ritzenthaler commented, "We maintain our Neutral rating and lift our price target to $27 (from $26) on shares of CREE following in-line F2Q results and an outlook for F3Q that bracketed consensus expectations. Although management did not officially modify their FY16 targets of $1.8B in revenues and 8% OI margins on the call (we are modeling $1.74B and 7.0%), meaningful improvement in LED gross margin in the back half of the fiscal year looks less and less likely with each passing quarter, in our view. While the completion of the manufacturing streamlining is an incremental positive, we believe the weight and potential margin volatility of the LED portfolio will keep the stock range bound for at least the next 2-3 quarters."

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Shares of Cree closed at $24.29 yesterday.