Wolfspeed Stock Giving Back Gains as Analysts Cut Price Target (NYSE: WOLF)

Wolfspeed's stock price (NYSE: WOLF) has given up half of the recent gains, with a ~20% decline during the pre-market session returning the stock back to where it began the month of May. The recently released Q3 2025 earnings call highlighted some of the financial challenges that the firm is having to navigate.

Whilst an EPS of -$0.72 was a beat on the 82c loss expected, revenue came in slightly light at $185.4 million ($185.77M expected). Analysts were quick to trim price targets on the print, with Citi downgrading the firm to Sell (from Neutral) with a $3 target replacing the previous $7. Piper Sandler lowered their price target to $6 (from $10), albeit with an Overweight rating. JP Morgan went the other way, with a downgrade to Underweight from Neutrakl.

CEO Robert Feurle emphasised the company's focus on rightsizing operations and accelerating its path to cash flow breakeven. Significant restructuring efforts are underway to enhance efficiency and streamline decision-making processes.

One major initiative in Wolfspeed's restructuring plan is the closure of its Farmers Branch 150-millimeter facility, with further plans to shut down the Durham 150-millimeter wafer fab by the end of 2025. This move is expected to reduce the workforce by approximately 25% and improve overall operational efficiency.

Chairman of the Board, Thomas Werner, reported that Wolfspeed's 200-millimeter products have achieved industry-leading quality. Consequently, the company plans to ramp up production of these products as market conditions become more favorable. Furthermore, Wolfspeed is actively sampling materials and negotiating new contracts for wafer supply to bolster its market presence.

To ensure continued financial stability, Wolfspeed's key priorities include strengthening its balance sheet, raising cost-effective capital, and enhancing financial performance. Neill Reynolds, CFO, highlighted the company's target of achieving $200 million in annual cash savings and securing $150 million in liquidity from non-core asset divestitures.

Additionally, Wolfspeed concluded the quarter with over $1.3 billion in cash and liquidity, aided by receiving $192 million in cash tax refunds. The company also anticipates receiving approximately $600 million in tax refunds during fiscal 2026. Wolfspeed is engaging with lenders about its capital structure and is open to both in-court and out-of-court options to optimise financial health.

The company is also conducting an external search for a new Executive Vice President and Chief Operating Officer, aimed at reinforcing its leadership team. These strategic efforts align with Wolfspeed's commitment to enhancing teamwork, accountability, and decision-making as it navigates the current economic landscape.