By Chibuike Oguh
NEW YORK (Reuters) – Wolfspeed Inc shares plunged by nearly 21% on Thursday after analysts slashed price targets and sounded a cautious note about the chip maker’s profit trends after its disappointing results.
At least six brokerages cut their price targets for Wolfspeed shares after the company predicted a larger-than-expected quarterly loss after the market closed on Wednesday.
“Changes in expense/margin reporting methodology could create uncertainty around company trajectory, and lower GM [general merchandise] highlights muted profitability levels versus peers,” Bank of America analysts, led by Vivek Arya, wrote in an investor note.
Bank of America, which rates the stock “underperform,” cut its price objective on the stock to $49 from $56.
Wolfspeed shares were down 16.7% to $44.31 in afternoon trading. The stock fell as low as $42.01 during the session, its lowest level in three months.
Wolfspeed’s operating expenses are expected to rise in the first quarter as it books costs associated with ramping up production at its new silicon carbide chip-making facility located in the Mohawk Valley region in upstate New York, the company said on Wednesday.
As a result, Wolfspeed said its adjusted net loss per share would come in between 60 cents and 75 cents in the first quarter ending in September, compared with the average analyst forecast of a 50 cent net loss, according to Refinitiv.
With Thursday’s drop, Wolfspeed’s stock was down about 35% year-to-date.
(Reporting by Chibuike Oguh in New York; editing by Lewis Krauskopf and Deepa Babington)
