Cree Likely To Witness Significant Lighting Revenue Decline In Q3’16

-22.09%
Downside
80.07
Market
62.38
Trefis
CREE: Cree logo
CREE
Cree

Leading LED products manufacturer, Cree is set to announce its Q3 2016 earnings on April 26th, 2016. (Fiscal years end with June.) Earlier this month, the company revised its guidance for the quarter, lowering  estimates, due to lower than expected commercial orders for lighting products. Cree deemed the decline to be temporary and attributed it to service disruptions arising from an ERP system upgrade. However, investors reacted strongly to this news, inducing a more than 10 percent drop in the stock price.

The past year has been a tough journey for the LED industry, as margins have squeezed to a point where it has become increasingly difficult for a large number of companies to stay afloat. Even though we expect Cree not to see much revenue growth in 2016, due to pricing pressure and high competition, we believe that the company can leverage its vertically integrated model and its restructuring efforts for cost improvements to improve margins. Below we analyse key metrics for Cree as expected in its Q3’16 results.

Cree_Q&A_Preearning

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Cree
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