Wolfspeed's Future Relies On Mohawk Valley Fab: Analyst

Piper Sandler analyst Harsh V. Kumar reiterated the Overweight rating on Wolfspeed, Inc. WOLF, lowering the price target to $55 from $75.

The company will publish its Q1 results on Monday, October 30, 2023.

Given the sale of the RF business to MACOM Technology Solutions Holdings, Inc. MTSI, the analyst now models ~$195 million in revenues versus ~$231 million previously, reflecting a $35 million contribution from the legacy RF segment. 

On the operating expenses side, the analyst lowers the total opex to $109 million versus $120 million prior to the deal.

Going forward, Kumar believes the stock will be driven primarily by results out of Mohawk Valley after many quarters of delays. 

The analyst eyes ~$3 million in revenues from MVF in the September quarter, with an eventual ramp to the expected $100 million of wafer output coming in the upcoming June quarter.

WOLF has stated that their Durham, NC, facility is running at full capacity and is maxed out due to the technological capabilities of the facility, the analyst notes. 

In terms of revenues, the facility only can produce $100 million per quarter in device revenues, which only represents around 20% of the output of MVF. 

The analyst thinks it is imperative for WOLF to ramp the Mohawk Valley facility to their targeted forecasts with no further delays, given the current state of the legacy fab and the outsized demand for SiC devices.

The analyst lowered the FY24 revenue estimate from $1.052 billion to $885.8 million.

Price Action: WOLF shares are trading lower by 2.02% to $33.02 on the last check Thursday.