This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Will the Bleeding End for Cree, LED Stocks?

(Cree, LED lighting stocks story updated for bearish Cree options trading)

NEW YORK ( TheStreet) -- The outlook for LED lighting sector stocks, including industry bellwethers Cree (CREE - Get Report), Veeco (VECO - Get Report) and Aixtron (AIXG - Get Report) dimmed a bit this week.

There were a spate of negative reports on the inventory build-up in the LCD flat-panel television sector on Wednesday, sparking a new negative read-through for companies linked to the LED supply chain for flat panel TV backlighting.

Industry consultant iSuppli was out with a report showing high inventory levels in the LCD market. The iSuppli data was one data point among a raft of negative numbers in a Wall Street Journal report on Wednesday detailing the bleak conditions among LCD TV makers, with utilization cuts coming from companies in the market. Weak demand in Europe and the U.S., a much-anticipated (but never to occur) surge in World Cup television buying, and an inventory backlog of six to nine weeks in July, were all mentioned in the WSJ report.

Boston-based securities firm Avian Securities downgraded Veeco and Aixtron to neutral, citing the same higher inventory in the LCD space and weak consumer spending.

If it seems like the sudden flood of negative news for the LED lighting stocks that sell into the LCD TV market came out of nowhere on Wednesday, it didn't. In fact, reports about the LCD inventory build-up and a looming rationalization of supply of LEDs for the TV market have been bandied about for months already. Veeco and CREE slumped by near double-digit percentage margins on Wednesday, and Aixtron declined as well, but it's just the latest selling pressure on these shares.

Since August 9, Cree shares are down by more than $22. In the case of Cree, its recent lowering of revenue guidance for the September-end quarter exerted specific pressure on shares.

Veeco shares are down $12 since early August.

Of course, August was a tough month for the markets in general, but more concerning for these LED stocks is that they've been on a downward trend since reaching year-to-date highs in April.

Bill Ong, an analyst at Merriman Curhan Ford said that the Wednesday selling action was pretty late in the game for those in-the-know about the LED sector. This doesn't mean Ong thinks stocks like Cree and Veeco won't fall any lower before the cyclical slide is over -- indeed, he thinks they will sink more -- but the analyst thinks that the unraveling in the LED sector has to be seen as beginning earlier, and lasting longer.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AIXG $3.42 0.00%
CREE $29.23 0.00%
VECO $17.81 0.00%
AAPL $93.99 0.00%
FB $102.01 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs