The board of directors at LED lighting company Cree has authorized repurchasing up to $300 million of the company’s stock over the next 12 months.
The new repurchase plan, disclosed in a Securities and Exchange filing on Thursday, is a follow-up to the $150 million that Cree spent on repurchasing 5.8 million shares during the fiscal year that ended June 26.
Cree CEO Chuck Swoboda told analysts during a conference call earlier this month that the company would use the $850 million in cash that it receives from the upcoming sale of its power and radio frequency subsidiary Wolfspeed for stock repurchases and acquisitions.
That influx of cash is one of the key reasons that Roth Capital Partners analyst Craig Irwin, who initiated coverage of Cree this week, rates the stock a buy.
“We expect Cree to remain an opportunistic buyer of its own stock,” Irwin wrote in his first research note, which was issued before Cree unveiled its new buyback plans. Wall Street likes buybacks because they boost earnings on a per-share basis by reducing the number of outstanding shares.
Irwin also likes the prospect of Cree expanding its product portfolio with acquisitions.
Irwin’s 12-month price target for Cree shares is $34.
Cree shares closed Friday at $24, up 12 cents.