Cree's (NASDAQ:CREE) Downside Risk Predominant in Short Term

Even though macro trends are moving in the right direction for Cree (NASDAQ:CREE), in the short term Deutsche sees downside risk stronger than upside risk.

Deutsche says, "We are raising our PT to discount improving macro trends (NASDAQ +12% since Cree reported), increased confidence in Cree’s competitive position (following checks) and a rebound in street lighting demand. While we see more downside vs upside risk for shorter-term investors (given the excitement around the Mar Q guide), we believe Cree’s competitive position will insulate its margins more than most bears fear over the next 12-24 mos. We would become more constructive on Cree at a lower valuation or following reduced near-term expectations."

Deutsche Bank reiterates a "Hold" on Cree, which closed Thursday at $65.46, losing $3.74, or 5.40 percent.Deutsche raised their price target on Cree from $50 to $65.