Cree Sinks to Lowest Since October Amid Weakening LED Prices

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Cree Inc. tumbled to its lowest level in eight months as its revenue outlook fell short of forecasts and the lighting company said it will restructure its LED business due to weaker-than-anticipated prices.

The Durham, North Carolina-based company said Wednesday it expects revenue of $375 million for the fourth quarter, $45 million below the low end of the company’s prior guidance. The company said it will restructure its LED products business to reduce excess capacity and lower costs. Its board also authorized a $500 million stock buyback for 2016.

Cree shares slid 10 percent to $27.51 at 4 p.m. in New York, the lowest level since October. The stock has fallen 43 percent in the past 12 months.

JPMorgan Chase & Co. lowered its price target for Cree to $35 from $39, while reiterating an overweight rating. The decision to restructure the LED business is overdue and recognizes the reality of the market, and the new 2016 targets are realistic, the analysts led by Paul Coster wrote in a note to clients.

“Although we are lowering estimates, we think the stock can appreciate modestly from current levels,” Coster wrote. He said the new buyback authorization should provide support for the stock.

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