Judging by the early reaction in the market, LED specialist Cree (Nasdaq:CREE) is going to take a hit in the wake of its fiscal fourth-quarter earnings and forward guidance. At first blush this may look like a case of Wall Street saying that nothing is ever good enough, but a quick glance at the valuation reveals a more typical growth stock profile. This, then, is the tradeoff for investors - the ride up from below $15 in late 2008 to the recent high near $80 was a blast, but with that moves comes extremely aggressive expectations and hair triggers on the sell orders at the first hint of trouble.
The Quarter That Was
Simply put, there just are not very many companies growing like Cree right now. Revenue jumped 79% this quarter to $265 million, with XLamp LED components once again proving to be a strong driver. Impressive as that growth is, it was basically spot-on for what analysts had forecast for the company. Once again, this is a company that is doing great, but where the expectations are so high that a lot of institutional investors are going to turn around and ask "what else ya got?"
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