Citi cuts Wolfspeed to Sell on ‘significant financial challenges’

Citi downgraded Wolfspeed (WOLF) to Sell from Neutral with a price target of $3, down from $7. The company did not provide guidance for the June quarter and did not take questions during the earnings call or hosted callbacks, the analyst tells investors in a research note. The firm says that while Wolfspeed continues to explore ways to reduce costs, strengthen capital structure and seek various funding sources, management pointed out that the company may elect to pursue either in-court or out-of-court options as part of the lender negotiations. Therefore, Wolfspeed started including the risk of “substantial doubt about the Company’s ability to continue as a going concern,” Citi points out. It believes the company “faces significant financial challenges in a sluggish macro environment with financial losses, high leverage, CHIPS Act funding challenges underpinning doubts over going concern.”