Power Integrations (NASDAQ:POWI) Issues Earnings Results

Key Points

• EPS beat estimates, but revenue slightly missed: Power Integrations reported quarterly EPS of $0.46 versus the $0.42 consensus, while revenue of $125.48 million came in just below expectations. Revenue rose 6% year over year, and the company generated $37 million in free cash flow and raised its quarterly dividend.
• Management expects continued growth: Q4 revenue guidance of $118 million to $126 million implies 18% year-over-year growth at the midpoint, with non-GAAP gross margin expected around 55%. Industrial demand and design wins are supporting the outlook, despite softer consumer demand.
• Inventory and supply constraints remain challenges: Channel inventory increased to 11.8 weeks, and management expects it to remain above target. High-power demand also exceeds supply, with packaging and PCB constraints limiting fulfillment.

Power Integrations (NASDAQ:POWI - Get Free Report) posted its quarterly earnings data on Wednesday. The semiconductor company reported $0.46 earnings per share for the quarter, topping analysts' consensus estimates of $0.42 by $0.04, FiscalAI reports. The company had revenue of $125.48 million during the quarter, compared to analysts' expectations of $126.03 million. Power Integrations had a net margin of 5.58% and a return on equity of 5.50%.

Here are the key takeaways from Power Integrations' conference call:

• Profitability and cash generation improved: Q3 revenue rose 6% year over year to $125.5 million, while non-GAAP operating margin reached 21.4% and EPS increased 28% year over year. The company also generated $37 million in free cash flow and raised its quarterly dividend.
• Q4 outlook implies continued growth: The company forecast revenue of $118 million to $126 million, with the midpoint representing 18% year-over-year growth, and expects non-GAAP gross margin of about 55%. Management attributed the outlook to industrial strength and recent design wins, while noting softer consumer demand and supply constraints.
• Elevated channel inventory and supply issues remain risks: Channel inventory rose 4.5 weeks to 11.8 weeks amid weak appliance demand, delayed metering projects, and customers’ higher buffer-stock requirements; management expects inventory to remain above target and potentially sit at 9–10 weeks next year. Separately, high-power demand currently exceeds supply, with packaging and PCB constraints limiting the company’s ability to fulfill it.
• GaN and strategic-market opportunities are expanding: Power Integrations reported strong GaN design-win momentum, growing data-center opportunities—including four 800-volt auxiliary-power design-ins expected to enter production in 2027—and a larger automotive pipeline. Management sees potential to double its serviceable addressable market by 2031, though main-path data-center products are expected to roll out in 2028–2029.

Power Integrations Stock Performance

Shares of NASDAQ:POWI traded down $0.19 during midday trading on Wednesday, hitting $46.80. The company's stock had a trading volume of 663,170 shares, compared to its average volume of 944,645. The business's 50 day simple moving average is $49.65 and its 200 day simple moving average is $58.59. The company has a market cap of $2.61 billion, a P/E ratio of 104.00 and a beta of 1.58. Power Integrations has a 12-month low of $30.86 and a 12-month high of $91.18.

Analysts Set New Price Targets

Several research analysts recently weighed in on the stock. Williams Trading set a $80.00 price target on shares of Power Integrations in a research report on Thursday, August 6th. Susquehanna decreased their price target on shares of Power Integrations from $85.00 to $70.00 and set a "positive" rating on the stock in a research note on Wednesday, October 21st. Wall Street Zen upgraded Power Integrations from a "hold" rating to a "buy" rating in a report on Saturday, August 8th. Zacks Research lowered Power Integrations from a "strong-buy" rating to a "hold" rating in a research note on Monday, July 20th. Finally, Needham & Company LLC reduced their target price on Power Integrations from $90.00 to $80.00 and set a "buy" rating for the company in a report on Thursday, August 6th. Four research analysts have rated the stock with a Buy rating and four have assigned a Hold rating to the company's stock. According to data from MarketBeat, the stock has an average rating of "Moderate Buy" and a consensus price target of $68.83.

About Power Integrations

Power Integrations, Inc designs and manufactures high-performance semiconductor technologies used in energy-efficient power conversion. Its products help convert and control electrical power in applications such as consumer electronics, appliances, industrial equipment, communications infrastructure, renewable-energy systems, and electric vehicles.

The company's product portfolio includes integrated circuits for AC-to-DC and DC-to-DC power supplies, LED lighting drivers, power-factor correction, motor drives, and high-voltage gate driving.

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