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On Friday, Citi analysts, led by Atif Malik, reduced the price target for Wolfspeed shares (NYSE:WOLF) to $3.00, a significant decrease from the previous $7.00, while reaffirming a Sell rating on the stock. The company, currently trading at $4.43 with a market capitalization of $689 million, has seen its stock price plummet by over 33% year-to-date. According to InvestingPro analysis, the stock is showing signs of being slightly undervalued based on its Fair Value metrics. The adjustment follows Wolfspeed’s March-quarter earnings report, which presented revenue and earnings per share that met or exceeded Wall Street’s expectations. Despite these results, the company chose not to provide guidance for the June quarter and refrained from taking questions during the earnings call or hosting callbacks.
Wolfspeed’s management has been actively exploring strategies to cut costs, strengthen their capital structure, and secure various funding sources. However, they have also indicated that the company might consider either in-court or out-of-court restructuring options as part of its negotiations with lenders. InvestingPro data reveals the company carries a substantial debt burden of $6.52 billion, though it maintains a healthy current ratio of 4.64, indicating sufficient liquid assets to meet short-term obligations. Get access to 12 more exclusive ProTips and comprehensive analysis through InvestingPro’s detailed research reports. This uncertainty led to the inclusion of a "going concern" risk in the company’s 8-K filing, signaling doubts about its ability to continue operations in the future.
The firm is confronting substantial financial hurdles in a challenging macroeconomic climate, which includes persistent financial losses, high levels of debt, and difficulties in obtaining funding through the CHIPS Act. InvestingPro analysis highlights concerning metrics, including a negative gross profit margin of -12.28% and rapid cash burn rate. Discover detailed insights about Wolfspeed’s financial health and future prospects in InvestingPro’s comprehensive research report, available for over 1,400 US stocks. These issues have raised concerns about the company’s ongoing viability. Citi analysts have revised their estimates downward, citing a macroeconomic slowdown in automotive demand and a decline in silicon carbide (SiC) wafer pricing.
The decision to lower the price target to $3 from $7 was based on a consistent valuation method pegging the company at 1x price-to-book (P/B). The Sell rating has been maintained, reflecting the analysts’ valuation concerns amidst the current financial and operational challenges faced by Wolfspeed.
In other recent news, Wolfspeed Inc. released its third-quarter earnings for 2025, reporting an adjusted earnings per share (EPS) of -$0.72, which was better than analysts’ predictions of -$0.82. The company generated $185 million in revenue, slightly missing the forecast of $185.66 million. Wolfspeed announced a strategic shift, including a 25% workforce reduction and the closure of 150mm facilities to concentrate on 200mm silicon carbide manufacturing. The company’s restructuring efforts aim to streamline operations and focus on high-growth sectors such as AI data centers and electric vehicles. Additionally, Wolfspeed’s free cash flow was reported at -$168 million, while it maintains over $1.3 billion in cash and liquidity. The company is targeting an EBITDA breakeven point at $800 million and expects to receive $600 million in tax credit refunds by FY2026. Analyst firms have not provided upgrades or downgrades in the recent reports. These developments reflect Wolfspeed’s ongoing efforts to realign its business strategy and financial structure.
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