Wolfspeed (NYSE:WOLF) Shares Gap Up – Should You Buy?

Wolfspeed, Inc. (NYSE:WOLF) gapped up before the market opened on Thursday. The stock had previously closed at $31.37, but opened at $35.02. Wolfspeed shares last traded at $32.5740, with a volume of 7,024,978 shares changing hands.

Wolfspeed News Summary

Here are the key news stories impacting Wolfspeed this week:

• Positive Sentiment: Wolfspeed received a conditional commitment for up to $1.5 billion in 30-year financing from the U.S. Department of War’s Office of Strategic Capital. The funds are intended to expand U.S. production of silicon-carbide materials and wide-bandgap power devices, including applications tied to national security. Reuters article
• Positive Sentiment: The long-term financing could provide Wolfspeed with additional liquidity for capital-intensive manufacturing projects, strengthen its balance-sheet flexibility and support the development of a domestic wide-bandgap semiconductor supply chain. The announcement triggered heavy buying and a sharp rise in the stock during extended and regular trading. Wolfspeed financing announcement
• Positive Sentiment: Investor interest was strong enough for Wolfspeed to outperform larger power-chip companies and the broader semiconductor group, as market participants focused on the potential government backing and strategic importance of its technology. 247WallSt article
• Neutral Sentiment: The commitment is conditional, so the financing is not yet equivalent to cash in hand. Investors will likely monitor the final terms, eligibility requirements, project execution and the effect of additional long-term debt on Wolfspeed’s finances. MarketWatch article
• Negative Sentiment: Before the financing announcement, Wolfspeed faced continuing operating pressure: a wafer launch was associated with losses, while its latest reported revenue declined year over year and the company remained unprofitable. Those fundamentals remain important risks even with government support. Ad-hoc-News article

Wall Street Analysts Forecast Growth

A number of equities analysts have issued reports on WOLF shares. TD Cowen reaffirmed a “hold” rating and issued a $25.00 target price on shares of Wolfspeed in a report on Thursday, August 20th. Zacks Research upgraded shares of Wolfspeed to a “hold” rating in a report on Friday, September 25th. Wall Street Zen downgraded shares of Wolfspeed from a “sell” rating to a “strong sell” rating in a research report on Saturday, September 19th. Weiss Ratings raised shares of Wolfspeed from a “sell (d-)” rating to a “sell (d)” rating in a research note on Monday, August 24th. Finally, Susquehanna decreased their price objective on Wolfspeed from $40.00 to $30.00 and set a “neutral” rating for the company in a report on Tuesday, July 21st. One research analyst has rated the stock with a Buy rating, three have assigned a Hold rating and one has issued a Sell rating to the company’s stock. According to MarketBeat.com, the stock currently has a consensus rating of “Hold” and a consensus target price of $25.00.

Wolfspeed Price Performance

The firm has a market capitalization of $1.68 billion and a P/E ratio of -2.00. The company has a fifty day moving average of $27.83 and a 200 day moving average of $35.01.

Wolfspeed (NYSE:WOLF) last released its quarterly earnings results on Wednesday, August 19th. The company reported ($2.26) earnings per share (EPS) for the quarter, topping the consensus estimate of ($2.45) by $0.19. The firm had revenue of $149.60 million for the quarter, compared to the consensus estimate of $150.00 million. During the same quarter in the previous year, the business posted ($0.77) EPS. The firm’s revenue for the quarter was down 24.1% compared to the same quarter last year. On average, sell-side analysts forecast that Wolfspeed, Inc. will post -8.27 EPS for the current year.

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently made changes to their positions in the business. Royal Bank of Canada acquired a new stake in Wolfspeed during the first quarter worth approximately $89,000. FNY Investment Advisers LLC acquired a new position in Wolfspeed in the second quarter valued at approximately $204,000. AXQ Capital LP acquired a new position in Wolfspeed in the second quarter valued at approximately $208,000. Concurrent Investment Advisors LLC bought a new position in shares of Wolfspeed during the 2nd quarter worth approximately $229,000. Finally, WINTON GROUP Ltd bought a new position in shares of Wolfspeed during the 2nd quarter worth approximately $299,000.

About Wolfspeed

Wolfspeed, Inc (NYSE:WOLF) develops and manufactures semiconductor technologies based primarily on silicon carbide, a wide-bandgap material designed to support efficient power conversion and high-temperature operation. Its products are used in applications where reduced energy loss, higher power density and improved thermal performance are important.

The company’s offerings include silicon carbide wafers and materials, power modules, metal-oxide-semiconductor field-effect transistors (MOSFETs), diodes and other power semiconductor devices.