UBS said in a research note that it's keeping a Sell rating on the shares of Cree, Inc.
Analyst Stephen Chin noted the company's September quarter results were in line with its guidance. Lightning business revenues were down 7 percent sequentially but up 26 percent year-over-year, with lighting margin improving 100 basis points sequentially.
Slowing LED business
While noting that Cree's LED chip sales rose 3 percent year-over-year, UBS said it expects a slowdown, as equipment suppliers see higher orders from Cree's China-based LED competitors.
UBS expects the Wolfspeed sale to close by the end of calendar year 2016. The $585 million proceeds could be used for M&A or returns to shareholders, the firm said.
Citing the weaker December quarter revenues and non-GAAP earnings per share guidance, UBS lowered its 2018 earnings per share estimate to $0.60 from $0.67. The company targets capex of $55 million, free cash flow of $100 million for 2017, the firm noted.
As such, UBS reiterating its Sell rating, while it lowered its price target to $19 from $21.
At time of writing, Cree shares were plunging 13.33 percent to $21.84.
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|Oct 2016||Stephens & Co.||Downgrades||Overweight||Equal-Weight|
|Sep 2016||Williams Capital||Initiates Coverage on||Buy|
|Sep 2016||Canaccord Genuity||Assumes||Hold|
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