Cree, Inc. (CREE) New CEO Appears to Be Making a Quick Impact: Oppenheimer

Cree leadership begins strategic review to maximize shareholder value; While feeling encouraged, Colin Rusch remains sidelined.


Earnings season continued to have an impact on individual stocks, and Cree, Inc. (NASDAQ:CREE) is a winner in finishing with strong advances on the day. The reason? During yesterday’s earnings call, CEO Gregg Lowe stated that the company will explore a strategic direction that gives the best opportunity to increase shareholder value, grow the business and improve profitability.

Oppenheimer analyst Colin Rusch commented, “New CEO appears to be making a quick impact. Clearly the management change at CREE is bringing increased discipline on operational spending and a renewed focus on strategic positioning. While we understand this process may take some time, we believe the company will be well served by this process including the possibility of material changes to both operating structure and product focus.”

“We are encouraged to see revenue growth with Wolfspeed as demand for advanced chips grows in part driving by the electrification of the transportation industry. As we lower both revenue and margin expectations for the lighting business, we note Wolfspeed is making up for those losses as we model out into FY19,” the analyst added.

Bottom line, “As the company goes through its strategic review with new leadership, we expect the company to identify meaningful operational efficiencies, but may encounter areas that need investment to correct, notably in the lighting business. We remain on the sidelines until we have a better sense of CREE’s strategic plans.”

Rusch reiterates a Perform rating, without suggest a price target. (To watch Rusch’s track record, click here)

Rusch is not alone in playing it safe on the LED giant, as TipRanks analytics exhibit CREE as a Hold. Out of 8 analysts polled by TipRanks in the last 3 months, 1 is bullish on Cree stock, 6 remain sidelined, and 1 is bearish on the stock. With a loss potential of 21%, the stock’s consensus target price stands at $27.