Tech Wrap-Up: CREE, BRCM, AMD, MSI
LED manufacturer Cree, Inc. plummeted 16.9% during Wednesday trading after reporting first-quarter profits a day earlier.
The Durham, North Carolina-based company recorded first-quarter earnings of 39 cents on $391 million in revenue, compared to 27 cents on $315.8 million a year earlier. Net income totaled $47.3 million, a 49% year-on-year increase.
"The strong performance was primarily due to increased sales of our lighting products, higher gross margins and improved operating leverage across the business," said CEO Chuck Swoboda in a statement.
However, investors remained concerned on a lower-than-expected second-quarter guidance of between 36 and 41 cents a share and low gross margins on its moneymaker division, lighting.
Financial services company D.A. Davidson has maintained its "neutral" rating and $65 price target, citing concerns on the "company's ability to grow margins".
"We point out that gross margins within the company's Lighting Products segment (27%) are significantly lower than gross margins within both the LED Products (47%) and Power & RF (54%) segments," analyst Avinash Kant said in a research report. "As the Lighting Products division has been the fastest-growing segment for Cree (both sequentially and on a year-over-year basis), we believe margin expansion prospects remain challenging despite expectations of strong revenue growth."
TheStreet Ratings team rates Cree Inc as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate Cree Inc (CREE) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
- You can view the full analysis from the report here: CREE Ratings Report
Broadcom lost 2.9% to $26.36 by market close, shedding a further 0.6% in after-hours trading. On Tuesday, the semiconductor company reported earnings of 76 cents a share, compared to analysts' expectations of 69 cents a share, according to Thomson Reuters. Third-quarter revenue totaled $2.146 billion, a 3% year-on-year increase, and net profit of $316 million, 43.6% higher than a year earlier.
For the fourth quarter, Broadcom said revenue would be around $1.975 billion within a positive or negative 3% range. Investors were disappointed having expected a total $2.135 billion in fourth-quarter revenue.