Power Integrations, Inc. (NASDAQ:POWI) shares fell 5.0% to US$97.67 in the week since its latest full-year results. It looks like a credible result overall - although revenues of US$421m were what analysts expected, Power Integrations surprised by delivering a (statutory) profit of US$6.49 per share, an impressive 271% above what analysts had forecast. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Power Integrations from five analysts is for revenues of US$475.7m in 2020, which is a decent 13% increase on its sales over the past 12 months. Statutory earnings per share are expected to plummet 66% to US$2.24 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$474.1m and earnings per share (EPS) of US$2.23 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 7.8% to US$99.20. It looks as though analysts previously had some doubts over whether the business would live up to their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Power Integrations at US$118 per share, while the most bearish prices it at US$75.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Power Integrations's past performance and to peers in the same market. It's clear from the latest estimates that Power Integrations's rate of growth is expected to accelerate meaningfully, with forecast 13% revenue growth noticeably faster than its historical growth of 4.5%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 8.3% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Power Integrations to grow faster than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Power Integrations going out to 2022, and you can see them free on our platform here.
We also provide an overview of the Power Integrations Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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