Shares of microchip and semiconductor company Wolfspeed (WOLF) are 5% lower after analysts at Mizuho Financial Group (MFG) downgraded the stock to a Sell-equivalent rating.
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Specifically, analysts at Mizuho downgraded WOLF stock to Underperform from Neutral and lowered their price target on the shares to $8 from $17. The analysts said they downgraded Wolfspeed as sales of electric vehicles continue to decline worldwide.
The majority of the microchips and processors made by Wolfspeed are used in electric vehicles and clean energy infrastructure such as solar panels. Slowing electric vehicle sales heading into 2025 are likely to negatively impact Mizuho’s revenue and overall financial results in coming quarters, said Mizuho.
Slowing Demand for Wolfspeed’s Chips
Beyond the slowdown in the electric vehicle market, the analysts at Mizuho said they are also worried about a growing oversupply of Wolfspeed’s silicon carbide chips, which is occurring due to rising competition in China, where domestic rivals are producing cheaper and more efficient chips.
Lastly, Mizuho took issue with slowing demand for Wolfspeed’s chips and semiconductors within the industrial and energy sectors. Those three issues led Mizuho to determine that Wolfspeed is not a good investment right now. News of the downgrade is pressuring WOLF stock, which has declined 80% this year.
Is Wolf Stock a Buy?
Wolfspeed stock has a consensus Hold rating among 15 Wall Street analysts. That rating is based on four Buy, 10 Hold, and one Sell recommendations issued in the past three months. The average WOLF price target of $20.36 implies 135.92% upside from current levels.
