JP Morgan Lowers PT On Cree

JP Morgan has published a research report on Cree, Inc. CREE after the company reported a disappointing quarter that JP Morgan believes will make investors wary of the return to growth and demand. In the report, JP Morgan writes "Cree reported C4Q10 rev/PF EPS of $257mn/$0.46 vs. our ests. of $279mn/$0.52. Inventory build in China was cited as the reason for demand weakness during the quarter and is expected to continue in C1Q11. The demand dislocation in China due to the setting of standards for LED-based lighting appears to have been larger than originally thought. Opex was higher than expected during C4Q10 and lowered earnings by $0.04. The increase was mostly from higher litigation expenses and acceleration in 150mm R&D. Cree guided for higher Opex in C1H11. The tax rate during the quarter was lower than expected and added $0.08 to earnings. EPS would have been $0.38 without the lower tax rate." JP Morgan maintains its Overweight rating but has lowered the price target from $77 to $62. Cree, Inc. closed yesterday at $62.71.