What happened
Shares of semiconductor developer Wolfspeed (WOLF +0.00%) were up 30% as of 1:46 p.m. ET on Thursday after the company reported strong earnings results for the fiscal fourth quarter ended June 26.
Wolfspeed said revenue reached $228 million from $145 million in the year-ago quarter. Adjusted earnings per share also narrowed from a loss of $0.23 in the year-ago quarter to $0.02 in the most recent quarter.
After such a strong finish to the fiscal year, management is seeing long-term upside to its previously issued outlook.
NYSE: WOLF
Key Data Points
So what
Wolfspeed just opened a new manufacturing facility for its silicon carbide product that is expected to drive higher demand as it ramps up -- much higher, in fact, than management originally anticipated.
For the recently completed fiscal year, revenue grew 42% year over year, with Wolfspeed announcing several new customer wins. A rosy outlook for demand, strong finish to fiscal 2022, and the improving profitability on the bottom line all contributed to the rising stock price.
Now what
Wolfspeed now expects revenue in the range of $232.5 million to $247.5 million for the fiscal first quarter, with an adjusted net loss between $0.02 and $0.08. Analysts expect revenue to increase by 39% next year.
During the earnings call, management noted that it is seeing growing demand as the world shifts to more efficient energy. This has stretched the market opportunity for silicon carbide to $35 billion.
The company's momentum in growing markets like electric vehicles and telecom bodes well for long-term growth. Management now sees the potential for revenue to reach 30% to 40% higher in 2026 than it previously estimated.
The only thing investors should be concerned about is valuation. The stock is up 383% over the last five years and trades at an expensive 19 times sales. That high valuation might limit further gains in the near term.
