What happened to Cree (Nasdaq: CREE) shares Wednesday?

In the

“Despite producing objectively strong revenue and earnings growth, Cree failed the ‘expectations test’ – missing Wall Street’s targets for revenue growth, and promising similar sub-expectations growth next quarter as well.”

Shares in the light emitting diode maker took a pounding early Wednesday following Tuesday’s quarterly financial report.

Cree said revenues would be flat at $270 million to $280 million. The consensus of analysts polled by Thomson Reuters was for $278 million.

Schaeffer’s Investment Research noted that analysts expected $296 million in revenues with a profit of 59 cents per share.

Cree’s earnings did top expectations for the last quarter. ()

Some analysts reacted negatively to the Cree forecast.

Barron’s reported that Bank of America/Merrill Lynch reduced Cree to neutral from buy.

Morgan Stanley cut Cree to “equal weight” from “overweight.”

Gabelli reduced Cree to “sell” from “buy.”

Kaufman Brothers reiterated its “hold” rating, the AP reported.

Cree opened down $5 at $48 Wednesday morning and hit a low of $47.81, the cheapest price for the stock since Sept. 10.

By mid afternoon shares rallied to close at $50.08.

Trading was heavy with more than 15 million shares, or more than three times the daily average, changing hands.

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