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Cree stock soars ever higher on earnings news

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DURHAM, N.C. – Shares in light-emitting diode maker Cree continue to draw buyers in droves on Wall Street.

Demand for Cree (Nasdaq: CREE) sent shares to a new 52-week high of $42.64 in after-hours trading Tuesday night. Just after the markets closed, Cree announced quarterly revenues and earnings that beat analysts expectations.

The surge continued Wednesday with shares up nearly 12 percent, or $4.82, to reach $45.97 in late afternoon trading.

More than 8 million shares were traded - four times the normal daily volume.

Cree finished the day at $45.89, up $4.73 or 11.5 percent.

Adding fuel to the fire of demand for shares, Cree forecast strong earnings for its current quarter.

Cree climbed $1.48, or 3.6 percent from Tuesday’s close of $41.16. Earlier in the day, Cree hit a 52-week high of $41.80.

However, one analyst was not overwhelmed by the Cree news.

Lazard Capital Markets analyst Daniel Amir said the quarter's gross 44 percent margins were impressive, but he kept a "Hold" rating on the stock.

"While (second-quarter) guidance was better than most of the Street expected, we recommend that investors wait on the sidelines until we have better visibility on the impact from government funding for efficiency and infrastructure projects," the analyst wrote in a note to investors.

Cree forecast adjusted earnings of 28 cents to 30 cents per share for the current quarter; analysts polled by Thomson Reuters are now expecting 29 cents. On Tuesday, analysts were predicting a profit of 23 cents per share.

Morgan Joseph analyst Ilya Grozovsky said higher LED sales for lighting applications drove sales growth in the quarter, with outdoor municipal lighting an important segment. Indoor lighting and LED replacement lamps also drove growth, he added.

“We got off to a very good start in Q1, as both revenue and profits exceeded our targets," said Chuck Swoboda, Cree’s chairman and chief executive officer. "We are benefitting from continued LED lighting adoption and high factory utilization and are well positioned for solid growth in Q2. As a result of the recent equity offering [some $400 million], we have the balance sheet to invest in the growth of our business as we look to continue to lead the LED lighting revolution."

Cree reported net income of $21 million, or 23 cents per share, on $169.1 million in revenue for its fiscal 2010 first quarter, ended Sept. 27. That's up from net income of $5.9 million, or 7 cents per share, on $140.4 million in revenue in the same period a year ago.

Excluding special items, Cree earned 30 cents per share in the latest quarter, up from 15 cents a year earlier.

Looking ahead, Cree said it expects second-quarter earnings of $21 million to $23 million, or 20 to 22 cents per share, on revenue of $180 million to $190 million. Excluding special items, the company projects earnings of 28 cents to 30 cents per share for the quarter, which ends Dec. 27.

Analysts, on average, predict quarterly profit of 23 cents per share on revenue of $173.2 million.

Cree makes light emitting diode products, including LED fixtures and bulbs, blue and green LED chips for backlighting, power-switching devices and radio-frequency/wireless devices.

The AP contributed to this report.
 

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