Wolfspeed Q2 Earnings Beat Estimates: Will 3Q25 Outlook Hurt Shares?

Wolfspeed WOLF reported a second-quarter fiscal 2025 non-GAAP loss of 95 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.01 per share but broader than the year-ago quarter’s loss of 55 cents.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Revenues of $180.5 million decreased 13.4% year over year but surpassed the consensus mark by 0.63%. Mohawk Valley Fab contributed $52 million in revenues in the reported quarter.Power Products accounted for 50.3%, while Materials Products contributed 49.7%. Power Products revenues decreased 15.7% year over year to $90.8 million. Materials Products revenues also decreased 10.9% year over year to $89.7 million.Wolfspeed Price, Consensus and EPS Surprise  Wolfspeed price-consensus-eps-surprise-chart | Wolfspeed QuoteWOLF’s shares have declined 82.3% over the past year, underperforming the Zacks Computer & Technology sector’s return of 26.7%.Wolfspeed faced challenges this quarter due to weak industrial and energy market demand, lower factory production and significant underutilization costs at Mohawk Valley. These factors may put downward pressure on WOLF’s shares.Wolfspeed’s Operating DetailsFor the fiscal second quarter, Wolfspeed reported a non-GAAP gross margin of 2%, down from 16% reported in the year-ago quarter. Underutilization costs of $28.9 million negatively impacted gross margin in the reported quarter.In the reported quarter, sales, general and administrative expenses were $51.1 million (28.3% of total revenues), down 21.3% year over year.Research & development expenses (24.6% of total revenues) decreased 2% year over year to $44.4 million.Wolfspeed incurred $22.8 million in factory start-up costs in the second quarter of fiscal 2025. These expenses arise from the construction and expansion of facilities not yet generating revenues but are expected to support future production.The company incurred a non-GAAP operating loss of $105.2 million, wider than the operating loss of $70.8 million in the year-ago quarter.WOLF’s Balance Sheet & Cash FlowAs of Dec. 29, 2024, WOLF had cash, cash equivalents and short-term investments of $1.40 billion compared with $1.69 billion as of Sept. 29, 2024.Long-term debt was $3.38 billion as of Dec. 29, 2024, compared with $3.13 billion as of Sept. 29, 2024.Free cash outflow was $598.1 million, comprising $195.1 million of operating cash outflow, $401.8 million of capital expenditures and patents spending of $1.2 million.Wolfspeed’s 3Q25 GuidanceFor the third quarter of fiscal 2025, Wolfspeed expects revenues in the range of $170-$200 million. Non-GAAP loss is expected between 88-76 cents per share.It expects non-GAAP gross margin in the range of negative 3 to 7%. Non-GAAP operating expenses are expected to be $104-$99 million.For the third quarter of fiscal 2025, the company expects to incur $72 million of restructuring-related costs, with $35 million in cost of revenues and $37 million in operating expenses.WOLF’s Zacks Rank & Stocks to ConsiderCurrently, Wolfspeed carries a Zacks Rank #3 (Hold).Badger Meter BMI, Motorola Solutions MSI and GoDaddy GDDY are some better-ranked stocks in the broader Zacks Computer and Technology sector. Each of the three stocks carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Badger Meter shares have risen 43.9% over the past year. BMI is set to report its fourth-quarter 2024 results on Jan. 31.Motorola Solutions shares have gained 43% over the past year. MSI is set to report its fourth-quarter 2024 results on Feb. 13.GoDaddy shares have surged 96.2% over the past year. GDDY is set to report its fourth-quarter 2024 results on Feb. 13.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Badger Meter, Inc. (BMI): Free Stock Analysis Report Motorola Solutions, Inc. (MSI): Free Stock Analysis Report Wolfspeed (WOLF): Free Stock Analysis Report GoDaddy Inc. (GDDY): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks