Banc of America Slashes Cree Estimates, Target

Analyst Alex Gauna more than halved the chipmaker's price target but praised its long-term growth prospects

Banc of America cut its guidance, estimate and price target on Cree (CREE ).

Analyst Alex Gauna believes LED segment pressures, which make up more than 50% of Cree's revenues, are the primary cause of the shortfall -- with Asia in particular impacting the outlook. He thinks competitive pricing pressures may continue near term as economic conditions slow and as capacity ramps.

He cut his $57 million Q4 revenue estimate to $45 million, and cut the $0.20 EPS to $0.14. Guana also reduced his $265.5 million fiscal 2002 (June) revenues to $185 million and trimmed the $0.87 EPS to $0.60.

Additionally, he cut the $80 target to $25. However, he reiterates his buy rating; says Cree continues to be a solid long-term growth story, driven by LEDs moving into new applications and platforms and the emergence of other power opportunities.

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