Power Integrations, Inc. (NASDAQ:POWI) Analysts Are More Bearish Than They Used To Be
The analysts covering Power Integrations, Inc. (NASDAQ:POWI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the latest downgrade, the six analysts covering Power Integrations provided consensus estimates of US$622m revenue in 2023, which would reflect a chunky 11% decline on its sales over the past 12 months. Statutory earnings per share are supposed to plunge 32% to US$2.26 in the same period. Prior to this update, the analysts had been forecasting revenues of US$718m and earnings per share (EPS) of US$2.93 in 2023. Indeed, we can see that the analysts are a lot more bearish about Power Integrations' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for Power Integrations
It'll come as no surprise then, to learn that the analysts have cut their price target 15% to US$73.17. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Power Integrations at US$85.00 per share, while the most bearish prices it at US$64.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 9.0% by the end of 2023. This indicates a significant reduction from annual growth of 13% 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 7.1% per year. It's pretty clear that Power Integrations' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Power Integrations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Power Integrations.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Power Integrations' financials, such as recent substantial insider selling. Learn more, and discover the 1 other risk we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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