By Sam Boughedda
Wolfspeed (NYSE:WOLF) was upgraded to Overweight from Neutral, with its price target raised to $160 from $130 by JPMorgan analysts on Monday.
They upgraded the stock ahead of its "crucial investor day" on October 31, which the firm believes will reinforce the capacity ramp, which is key to delivering on the bull thesis on the shares.
Wolfspeed shares are up over 1% at the start of Monday's session.
"The revenue and demand opportunity for the company has been less debated given: 1) strong ramp in electric vehicle production, exceeding +20% CAGR; 2) higher content opportunity for silicon carbide (SiC) in the electric vehicle industry, including ramp in content with higher voltages; and 3) market leadership in terms of Materials capacity," the analysts wrote.
From the upcoming investor day, JPMorgan expects a "mixed bag" in terms of financials, with raises in revenue guidance for FY24 and FY26, "although, accompanied by moderation to gross margin targets as well as a significant raise to the capex trajectory to fund the new Materials and yet to be announced Devices facility."
"When it comes to investor focus and critical drivers of the investment case, we expect the revenue upside and ramp of MVP being in line to better has more permanent implications in relation to separating WOLF from the peer group, which has made capacity announcements in a hurry in recent times in a bid to catch up to WOLF," they added.
"The upcoming investor day with proof points around the ramp in the Mohawk Valley facility (MVP) is likely to lend further ammunition to the bull case."