Wolfspeed’s Hold Rating: Financial Stability Concerns Amid Positive Developments and Competitive Pressures

Christopher Rolland, an analyst from Susquehanna, reiterated the Hold rating on Wolfspeed (WOLF – Research Report). The associated price target was raised to $3.00.

Christopher Rolland has given his Hold rating due to a combination of factors impacting Wolfspeed’s current and future performance. The company’s recent financial results were in line with expectations, but ongoing negotiations with creditors have cast a shadow over its outlook. The uncertainty surrounding CHIPS Act funding and precarious discussions with holders of unsecured convertible notes due in 2026 are significant concerns. Additionally, the company’s decision not to pursue a proposed equitization transaction and the potential consideration of in-court options raise questions about its financial stability.
Despite some positive developments, such as better-than-expected performance at Mohawk Valley driven by strong automotive revenue, challenges remain. The company’s long-term model adjustments reflect reduced revenue expectations, and while operating expenses have been managed, the lack of forward-looking guidance adds to the uncertainty. Furthermore, the company’s focus on strengthening its capital structure and the cancellation of the sell-side callback indicate ongoing challenges. Overall, while there are efforts to streamline operations and focus on SiC manufacturing, liquidity issues and competitive pressures, particularly from Chinese substrates, contribute to the Hold rating.