WOLF - Wolfspeed pops as JP Morgan upgrades ahead of 'crucial' investor day

Wolfspeed ( NYSE: WOLF ) shares rose on Monday as J.P. Morgan upgraded the semiconductor company ahead of its investor day on October 31, which the investment bank described as "crucial" given its likely focus on electric vehicles, silicon carbide and a new facility.

Analyst Samik Chatterjee upgraded Wolfspeed ( WOLF ) to overweight and raised his price target to $160, noting that the investor day is likely to "reinforce the capacity ramp key to delivering on the bull thesis on the shares."

Chatterjee noted that the new Mohawk Valley facility, which is ramping up production, should help Wolfspeed ( WOLF ) in its devices business, as well as its materials business. There should also be enough supply for customers and help Wolfspeed ( WOLF ) meet capacity, while also proving that it has "cost leadership" in the highly automated 200 mm silicon carbide plant.

The investor day may provide a "mixed bag" of financials, with the possibility for raises to revenue guidance in fiscal 2024 and 2026, but there could be a negative announcement concerning gross margin and increased spending.

"However, when it comes to investor focus and critical drivers of the investment case, we expect the revenue upside and ramp of [Mohawk Valley] being in line to better has more permanent implications in relation to separating Wolfspeed from the peer group, which has made capacity announcements in a hurry in recent times in a bid to catch up to Wolfspeed," Chatterjee wrote in a note to clients.

Wolfspeed ( WOLF ) shares were up nearly 5% to $110.87 in premarket trading.

Last week, investment firm William Blair initiated coverage on Wolfspeed ( WOLF ) and other players in the silicon carbide market .

Analysts are mostly cautious on Wolfspeed ( WOLF ). It has a HOLD rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates WOLF a HOLD .

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