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Valued at $1.4 billion by market cap, Wolfspeed Inc. (WOLF) is a bandgap semiconductor company that produces silicon carbide and GaN materials, silicon carbide bare wafers, epitaxial wafers, and GaN epitaxial layers on silicon carbide for RF, power, and other applications. Its products are used in diverse industries, such as 5G, electric vehicles (EV), aerospace and defense, and renewable energy and storage.
Founded in 1987, the North Carolina-based company was initially known as Cree before changing its name to Wolfspeed in 2021.
Is WOLF Stock Oversold?
Unlike some of its artificial intelligence (AI)-fueled semiconductor peers, WOLF stock has had a turbulent year, tracking similar volatility in chip stocks more closely tied to the auto and other cyclical sectors. WOLF has collapsed 75% YTD, and is down 20% in the last month alone.
The stock's underperformance has opened the door for some cage-rattling by activist investors, with Jana Partners taking a stake in Wolfspeed earlier this year. More recently, WOLF was also highlighted by Goldman Sachs in a recent note detailing potential M&A targets for 2025, with the brokerage firm predicting a return to dealmaking in the year ahead.
While the stock has yet to receive any bids from suitors, company executives and board members certainly seem to think the stock is a bargain around current prices, judging by a recent wave of purchases from well-placed Wolfspeed insiders.
Insider Buying on Wolfspeed
WOLF was the subject of significant insider buying activity on Nov. 20, when four major purchases hit the tape. Executive Chair Thomas Werner picked up $244,785 worth of WOLF stock; current director and former chair Darren Jackson invested just shy of $250,000; Intel (INTC) veteran and current Wolfspeed director Stacy Smith scooped up $195,373 of WOLF shares; and Texas Instruments (TXN) alum and sitting Wolfspeed director Duy-Loan Le invested $126,800 in shares.
Two days later, on Nov. 22, former IBM (IBM) and Intel exec Glenda Dorchak, also a board director at Wolfspeed, made a smaller purchase of just under $30,000 in WOLF shares. Dorchak bought in around $8.33, nearly two points higher than her colleagues that purchased days earlier.
Notably, the Nov. 20 purchases were made two days after Wolfspeed announced the departure of CEO and President Gregg Lowe.
This wave of insider buying on Wolfspeed was the first such activity since early February, when some of the same directors picked up shares in the mid-$20s.
Wolfspeed Dips on Poor Results
Prior to the latest insider buying activity, WOLF stock cratered 39% in a single day on Nov. 7 after posting its fiscal first-quarter earnings report, as the company continues to struggle under the weight of heavy restructuring charges.
The semiconductor specialist booked a loss of $282.2 million, or $0.91 per share on an adjusted basis, which surpassed the average analyst estimate for a loss of $1.01 per share. Revenue, on the other hand, totaled $194.7 million, which missed estimates of $200.1 million.
Management also offered weak guidance for fiscal Q2, with revenue expected in the range of $160-$200 million, compared to the Wall Street consensus of $214.6 million. Losses are expected to range between $0.89 and $1.14 per share, which - at the midpoint - came up short against analysts' expected loss of $0.91 per share.
What's the Verdict on WOLF Stock?
Analysts are relatively unenthusiastic on WOLF stock, with a consensus “Hold” rating among the 15 analysts in coverage. The mean price target of $13.88 suggests about 30% expected upside from current levels.
One of the stock's few fans is brokerage firm Roth MKM, which just backed a “Buy” rating and a Street-high $20 price target on WOLF. In a note, analyst Craig Irwin said Wolfspeed remains “strategically important” in the U.S. semiconductor supply chain, with his price target suggesting the stock can rise nearly 88% from here.
