Shares of LED lighting company Cree closed 5 percent higher Wednesday after the company reported better-than-expected quarterly results.
Earlier in the day, shares rose as much as 15 percent.
However, Cowen & Co. analyst Jeffrey Osborne noted that the results were buoyed by the Durham-based company’s previously announced settlement of its patent infringement and false advertising complaints against Feit Electric, a major competitor, and its supplier.
The settlement amount turned out to be “larger than expected,” Osborne wrote in a research note. He estimated that the settlement included a one-time payment of $35 million to $40 million, as well as future royalties that Feit agreed to pay.
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Some analysts also are concerned about the competitive landscape
“Competition and lingering execution issues may keep fiscal 2017 sales below consensus estimates,” Bloomberg Intelligence analysts wrote.
Cree’s sales suffered last spring when its conversion to a new software service disrupted its customer service. The company has been rebuilding its sales since then.
Cree issued its results for its fiscal second quarter Tuesday after the markets closed. The company reported adjusted net income of $30 million on revenue from continuing operations of $347 million – both of which bested Wall Street analysts’ forecasts.
CEO Chuck Swoboda also said during a conference call that the company will soon enter a new market: producing and selling LED lights for automotive exteriors, such as headlights and tail lights.
Cree shares closed Wednesday at $28.83, up $1.42.