Cree (CREE) Attempts Rebound After Citi Upgrade

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Cree, Inc. (CREE) shares rose about 2% during Wednesday's session after Citi upgraded the stock to Buy and raised its price target to $160 โ€“ a 35% premium to the current market price.

Key Takeaways

  • Cree shares opened higher after Citi upgraded the stock to Buy with a $160 price target, which represents a significant 35% premium over Tuesday's closing price.
  • Analyst Amanda Scarnati believes that President Biden will move to embrace electric vehicles (EVs) in a way that offsets near-term investor concerns.
  • The moving average convergence divergence (MACD) is nearing a bearish crossover that could point to more downside ahead if a rebound doesn't materialize.

Citi analyst Amanda Scarnati predicts that President Biden will detail a plan to invest $400 billion in clean energy during his inaugural State of the Union address. Restoring EV tax credits, installing a nationwide network of EV chargers, and improving battery technologies should outweigh near-term concerns over Cree's commercialization and competition.

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From a technical standpoint, Cree stock briefly recouped some of its losses from earlier this week. The relative strength index (RSI) appears neutral with a reading of 55.23, but the MACD appears on the verge of a bearish crossover. These indicators suggest that the stock is still at risk of resuming its downtrend.

Traders should watch for an ongoing move higher to retest highs of $129.90 over the coming sessions. If the stock breaks out from those levels, traders could see a move toward trendline resistance at around $132.00. If the rebound fails to materialize, traders could see a move toward trendline support at $112.00 or the 50-day moving average at $108.72.

Tip

A qualified electric vehicle credit can be found via Internal Revenue Code Section 30D. To receive the credit, the vehicles must be acquired for use or lease; the credit is not available for resale. In addition, the original use of the vehicle must begin with the taxpayer who uses the vehicle predominantly in the United States.

The Bottom Line

Cree shares opened higher during Wednesday's session after Citi upgraded the stock to Buy and raised its price target to $160 per share. Analyst Amanda Scarnati believes that upcoming catalysts could propel the EV sector higher and outweigh near-term investor concerns, although the MACD remains at tenuous levels that could point to a resumption of the stock's downtrend.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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