D.A. Davidson & Co. Believes Results And Outlook Reflect Margin Stabilization For Cree

In a report published Wednesday, D.A. Davidson & Co. analyst Avinash Kant reiterated a Buy rating and $70.00 price target on Cree (NASDAQ: CREE).

In the report, D.A. Davidson & Co. noted, “CREE reported Q4:FY14 non-GAAP EPS of $0.42 on revenues of $436.3 million (up 8% from Q3:FY14 and up 16% from Q4:FY13), with EPS beating but revenues missing our consensus-matching estimates of $0.41 on $445 million. Cree's tax rate remained steady at 16.3%, falling below the company's target of 21%, benefitting EPS by ~$0.02. Sales in Lighting Products lead growth in the quarter as further market penetration drove an 18% sequential improvement (56% year-over-year) followed by a 4% sequential increase in the Power & RF segment and a 1% decline in LED products. With segment gross margins in the fastest growing segment (Lighting Products) increasing 170bp sequentially, CREE's GAAP gross margins increased 20 basis points sequentially to 37.2% and exceeded the company's guidance of 36.8%.”

Cree closed on Tuesday at $49.20.