Boston, MA 08/14/2014 (wallstreetpr) – At least three brokerages have cut their price objective on the shares of Cree, Inc. (NASDAQ:CREE), a manufacturer of semiconductor materials and devices, on Wednesday after the company announced its fourth quarter numbers and offered first quarter guidance below the consensus on Tuesday after the market closed. However, they have reiterated their rating while two other brokerages preferred to downgrade the stock.
Price Tag Reduced
Investment advisor Northland Capital had reiterated its rating of Market perform on Cree, Inc. (NASDAQ:CREE) shares while Needham and Canaccord Genuity had retained their rating of Buy on Wednesday. Another brokerage, D.A. Davidson & Co. too had reiterated its rating of Buy on the company’s stock.
As far as price objective of one-year period is concerned, Northland Capital had slashed it to $52 from $57, Needham had cut to $55 from $59 and Canaccord Genuity had reduced it to $64 from $77 on Cree shares. However, Davidson had kept the price target of $70 on the company’s stock.
Downgrade
While Credit Agricole had downgraded the shares of Cree to Under perform from Outperform, Summit Research had slashed its rating to Hold from Buy in a research note issued to its clients on Wednesday.
Margin Stabilization
Financial advisor D.A. Davidson & Co. believes that the fourth quarter results of Cree, Inc. (NASDAQ:CREE) and the outlook for the first quarter reflected margin stabilization for the semiconductor device maker.
The brokerage’s analyst Avinash Kant said that though earnings per share of 42 cents topped consensus by a penny, revenue missed to meet consensus estimation of $445 million. Its tax rate was steady at 16.3%, which was down from Cree’s target of 21%, thus boosting earnings per share by two cents. He said that the sales were led by uptick in market penetration of lighting products fuelling 18% sequential uptick followed by 4% sequential growth in the power & RF division apart from one percent fall in LED products.
The analyst said that Cree could gain 20 basis points gross margin sequentially due to lighting products delivering 1.7 percentage points sequential uptick. The company’s GAAP gross margin of 37.2 had exceeded Cree’s outlook of 36.8%.
