NEW YORK (Reuters) - Shares of LED maker Cree Inc (CREE.O) rallied nearly 17 percent in early trading on Wednesday after the company said it was increasing output of its efficient lighting products and its profit margins were set to rebound.
The company, which reported slightly better-than-expected quarterly earnings after the market close on Tuesday, had seen its stock pummeled in recent days during the broad market sell-off.
Analyst Dale Pfau at Cantor Fitzgerald said Cree had likely seen a margin trough in the previous quarter.
“We recommend that investors aggressively accumulate shares at the current depressed valuation to take advantage of a multi-year secular growth trend in solid state lighting,” he said in a note to investors.
Cree’s operating margins excluding one-time items fell to 13.5 percent in its fiscal fourth quarter, less than half the 29.6 percent it recorded a year earlier.
Shares in Cree, which had touched a two-year low on Monday, rallied as high as $34.50 during early Wednesday trading, before slightly paring gains to trade at $34.30, up 16.3 percent.
Reporting by Matt Daily, additional reporting by Krishna Das in Bangalore, editing by Dave Zimmerman