CREE Destroys Estimates, Rallies 10%+ After-Hours

Semiconductor producer Cree Inc. reported a significant earnings beat Tuesday after the bell, and unlike IBM, shares are reflected the good news in after-hours trading. The company reported Q3 earnings of $0.38 / share, beating estimates by $0.08, and beat on revenues as well. But the real reason CREE is popping after-hours is the guidance handed down by management. For the coming quarter, CREE forecasted earnings of $0.41 – $0.44. The Street had been expecting a forecast of $0.28.

After hitting a 52-week high of $60 on 1/11, CREE sold off hard following Intel’s earnings announcement. Shares nearly fell to their 50-day MA, but stabilized before touching the mark, which now resides at $51.85. However, shares are up 10.91% after-hours, currently settling in at $60.12, a new 52-week high.

Before the earnings announcement, I would have considered $60.10 to be the buy point for CREE, or $0.10 above it’s high. In a way, I suppose that’s what I’ll stick to. A breakaway gap on strong volume is often reason enough to buy past a proper buy point, as such instances are generally indicators of significant strength in the following months. Still, I’d rather stay away from this one if it rallies too much off the open tomorrow. However, if it stays where it is now, I plan to put on a partial position with a 5% stop, with the intention of adding on if CREE continues to show strength in the coming days.

Disclosure: No positions in CREE.

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