Analysts at J.P. Morgan expect Cree to be one of the companies that benefit from accelerated adoption of LED lights in 2014.
Durham-based Cree has established a sustainable competitive advantage in the fast-growing LED industry, the analysts wrote in a research note on LED lighting issued earlier this month.
The firm rates Cree overweight, the equivalent of a buy, and set a 12-month target price for its shares of $75.
Cree shares closed Tuesday at $62.52, up 98 cents cents. Its shares rose 88 percent in 2013.
J.P. Morgan projects Crees earnings per share will rise 29 percent in the 2014 calendar year, while revenue will rise at least 18 percent.
In March, Cree unveiled an LED bulb sold exclusively at Home Depot thats the equivalent of a 40-watt incandescent bulb and retails for $9.97. That move created strong retail brand momentum in the United States that can translate into pricing and margin advantages across the firms broader lighting product line-up for commercial and industrial applications, the analysts wrote.
Rapidly declining prices of LED bulbs are expected to spur adoption of solid-state lighting, which today is a small piece of the overall lighting market.
Though many investors generally believe the LED growth-phase itself will be over within five years, we think this view overlooks the potential for LEDs to spur adoption of lighting in new applications, according to the analysts.