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Impinj, Inc. (NASDAQ:PI) just released its latest quarterly results and things are looking bullish. Impinj outperformed on both revenues and the expected loss per share, with revenues of US$48m beating estimates by 19%. Statutory losses were US$0.19, 54% smaller thanthe analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the consensus from Impinj's six analysts is for revenues of US$143.3m in 2020, which would reflect an uncomfortable 15% decline in sales compared to the last year of performance. Losses are forecast to balloon 72% to US$1.58 per share. Before this earnings announcement, the analysts had been modelling revenues of US$156.5m and losses of US$1.63 per share in 2020. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.
The analysts have cut their price target 9.1% to US$29.83 per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Impinj, with the most bullish analyst valuing it at US$38.00 and the most bearish at US$21.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 15%, a significant reduction from annual growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.8% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Impinj is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Still, earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Impinj. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Impinj going out to 2024, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 5 warning signs for Impinj (1 is potentially serious) you should be aware of.
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