WOLF - Wolfspeed slips as JP Morgan downgrades on worries of short-term issues

2023-04-17 07:55:18 ET

Wolfspeed ( NYSE: WOLF ) shares fell nearly 3% in premarket trading as J.P. Morgan downgraded the semiconductor company, citing the potential for the "higher likelihood" of negative catalysts in the near-term.

Analyst Samik Chatterjee lowered his rating on Wolfspeed ( WOLF ) shares to neutral from overweight and placed the stock on negative catalyst watch, noting that even though the company should see "material upside" from its Mohawk Valley facility and strength in the silicon carbide market, there are other issues are at hand. These included potential challenges at its Durham, North Carolina facility and a more modest ramp at Mohawk than initially anticipated.

"The challenges with Durham will limit the pace of improvement of revenue and gross margins to materially above [first-quarter] levels of $241M and ~36%, respectively, in the next 3-4 quarters to be reported, while we await a more material ramp from [Mohawk Valley] in the second half of Fiscal year 2024 (rather than early in the year), together implying downside to earlier stated targets for FY24 (e.g. $1.6B in revenue and ~45% gross margin)," Chatterjee wrote in an investor note.

Chatterjee also lowered his per-share price target to $65 from $100 as part of the downgrade.

In the long-range, Chatterjee said he is positive on Wolfspeed ( WOLF ), noting it should see pricing favorability from potentially as many as 200M silicon carbide devices.

Investment firm Wells Fargo recently listed Wolfspeed ( WOLF ) as one of the firm's top semiconductor stocks going into earnings .

Analysts are exceedingly mixed 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 SELL .

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