Shareholders might have noticed that Wolfspeed, Inc. (NYSE:WOLF) filed its third-quarter result this time last week. The early response was not positive, with shares down 3.5% to US$25.33 in the past week. Revenues came in at US$201m, in line with expectations, while statutory losses per share were substantially higher than expected, at US$1.18 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Wolfspeed
Taking into account the latest results, the most recent consensus for Wolfspeed from 19 analysts is for revenues of US$1.09b in 2025. If met, it would imply a solid 12% increase on its revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 24% to US$3.36. Before this earnings announcement, the analysts had been modelling revenues of US$1.20b and losses of US$2.87 per share in 2025. While next year’s revenue estimates dropped there was also a notable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target fell 12% to US$32.31, implicitly signalling that lower earnings per share are a leading indicator for Wolfspeed’s valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on Wolfspeed, with the most bullish analyst valuing it at US$52.00 and the most bearish at US$22.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It’s clear from the latest estimates that Wolfspeed’s rate of growth is expected to accelerate meaningfully, with the forecast 9.2% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 6.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 17% annually. So it’s clear that despite the acceleration in growth, Wolfspeed is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Wolfspeed. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Wolfspeed going out to 2026, and you can see them free on our platform here..
That said, it’s still necessary to consider the ever-present spectre of investment risk. We’ve identified 2 warning signs with Wolfspeed , and understanding them should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
