Cree Reports Disappointing Quarter, But Morgan Keegan Stays Positive

Morgan Keegan has published a research report on Cree, Inc. (NASDAQ: CREE) after the company reported disappointing guidance in its most recent quarterly earnings.

In the report, Morgan Keegan writes "We believe that Cree has won the majority of design wins for China street lighting applications but the ramp of this business is the unknown and is therefore not included in current March quarter guidance. We feel that the March quarter represents a low for financial performance for CREE and expect a rebound in the near future. We reiterate Outperform rating. Cree reported EPS of $0.55 on revenues of $257 million vs street expectations of $0.58 on $276.6 million. On an apples to apples basis and adjusting for a lower tax rate of 13.7% (vs our model of 23%) company reported EPS of $0.49. Gross margin in the quarter was 47.7%."

Morgan Keegan maintains its Outperform rating but has lowered the price target from $75 to $68.

Cree, Inc. closed yesterday at $62.71.