Cree Update

CREE

NASDAQ : US$62.83
BUY 
Target: US$74.00

COMPANY DESCRIPTION:
Cree is the leading manufacturer and supplier of silicon
carbide-based devices for a variety of applications,
including the rapidly growing green, blue, and ultraviolet
LED markets.
All amounts in US$ unless otherwise noted.

Sustainability — Energy & Power Technologies
IN-LINE Q, BETTER GUIDE.
REITERATE BUY AHEAD OF SECULAR
TREND, PT TO $74
Investment recommendation
We reiterate our BUY rating on CREE after an in-line quarter and better
guide, but more importantly we continue to believe that there will be
significant growth in LED component and fixtures this year. With
continued execution, we see Cree as well positioned to capture strong
share of this growing market.
Investment highlights
 While there are always moving parts to Cree’s multi-faceted
business, overall we continue to believe that they are doing all of the
right things to generate a sustainable business model and generate
earnings growth.
 The company is expanding its channel, expanding its product
portfolio, expanding capacity – albeit somewhat calculated to
maintain a healthy balance – and bringing down costs both
upstream and downstream.
 We are encouraged by further growth in lighting products and some
margin appreciation there plus cost downs, price downs and
aggressive pushes for market share in bulbs, which we view as a
solid investment.
 Despite some potential political minutiae, we believe that the macro
will continue to work this year as both the subsidized and
unsubsidized cost of LED lighting is far too compelling to ignore in
many applications.

 

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