Wolfspeed’s Upcoming Q2 Earnings Preview

Deutsche Bank analysts provided their outlook on Wolfspeed, Inc. (NYSE:WOLF) ahead of the upcoming Q2 results, scheduled to be announced on Jan 26.

The analysts expect Q2 sales to decline 7% quarter-over-quarter given well-understood execution challenges in the materials business as well as reduced availability of spare parts at the Durham site. According to the CEO, the first of these execution issues should recover quickly while the spare parts issue may take longer to fix.

Into Q3, the analysts expect sales to recover by 8% quarter-over-quarter and for non-GAAP gross margin to rise from 34% to 37%. The analysts lowered their price target to $80.00 from $90.00 while reiterating their Hold rating on the company’s shares.

Wolfspeed (NYSE:WOLF) shares plunged more than 18% on Thursday following the company’s reported Q1 results. While both EPS of ($0.04) and revenue of $241.3 million came in better than the Street estimates of ($0.05) and $239.77 million, respectively, the guidance was disappointing.

The company expects Q2 revenue to decline to $225 million at the midpoint of a range, worse than the Street estimate of $252.6 million. EPS is expected to be in the range of ($0.16)-($0.08), compared to the Street estimate of $0.01.

Oppenheimer analysts said they were impressed with the cadence of design-ins and the conversion to design wins and the electrification of the transportation market accelerates. The analysts also believe the company has numerous sources of capital for its capacity build-out (including both federal and state level support as well as customer deposits and project debt/equipment finance) but expect shares to remain under pressure until uncertainty around capital sources is removed.

Wolfspeed (NYSE:WOLF) shares plunged more than 18% on Thursday following the company’s reported Q1 results. While both EPS of ($0.04) and revenue of $241.3 million came in better than the Street estimates of ($0.05) and $239.77 million, respectively, the guidance was disappointing.

The company expects Q2 revenue to decline to $225 million at the midpoint of a range, worse than the Street estimate of $252.6 million. EPS is expected to be in the range of ($0.16)-($0.08), compared to the Street estimate of $0.01.

Oppenheimer analysts said they were impressed with the cadence of design-ins and the conversion to design wins and the electrification of the transportation market accelerates. The analysts also believe the company has numerous sources of capital for its capacity build-out (including both federal and state level support as well as customer deposits and project debt/equipment finance) but expect shares to remain under pressure until uncertainty around capital sources is removed.