Wolfspeed: Still Not Convinced After The Bankruptcy - Earnings Preview
Wolfspeed is rated as a Sell with a $8.42 price target, significantly below its current ~$29 level, due to persistent operational weaknesses despite improved debt levels post-Chapter 11. The company has reduced debt by 70% and extended cash runway to 3.5 years, but continues to struggle with deeply negative gross margins and soft revenue guidance. A strategic shift from electric vehicles to AI and data center applications for silicon carbide components is underway, though profitability remains uncertain. Market optimism and a collaboration with Renesas appear already priced in, leaving limited room for upside.
- ▪Wolfspeed is rated Sell with a $8.42 price target versus a current share price of approximately $29.
- ▪The company emerged from Chapter 11 bankruptcy with 70% less debt and a 3.5-year cash runway.
- ▪Gross margins remain deeply negative and revenue guidance is weak despite the improved capital structure.
- ▪Wolfspeed is shifting focus from EVs to AI and data center applications for silicon carbide power devices.
- ▪The market may have already priced in optimism from the Renesas partnership and restructuring progress.
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