Cree (CREE) shares are sharply higher after UBS analyst Ahmar Zaman today upped his rating on the stock to Buy from Neutral, while lifting his price target on the shares to $92, from $60.
Zaman notes that UBS today is lifting its forecast for 2011 general lighting LEDs to 9.7 billion square meters to 7.3 billion previously, “given an increasing focus on lighting from LED companies” during recent visits with LED companies in Asia.
“Our checks in Asia suggest the bear case of competitive pressure on Cree likely takes longer to develop,” he writes. “We note that many LED chip makers in Korea, Taiwan and Japan continue to out-source high-power LEDs from Cree, as their in-house yields on lighting-class LEDs are not sufficiently high.” Zaman says that Cree and Nichia “continue to split the market for lighting-class LEDs for the near term.”
Zaman upped his EPS forecast for the June 2010 fiscal year to $1.54 from $1.46; more importantly, he lifted his 2011 forecast to $2.44, from $1.75, and now sits well ahead of the Street at $2.01.
CREE is up $6.02, or 8.5%, to $76.62.
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