Earnings To Watch: Power Integrations (POWI) Reports Q1 Results Tomorrow

Anthony Lee /
2023/05/03 3:31 am EDT
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Semiconductor designer Power Integrations (NASDAQ:POWI) will be announcing earnings results tomorrow afternoon. Here's what to look for.

Last quarter Power Integrations reported revenues of $124.8 million, down 27.7% year on year, missing analyst expectations by 0.62%. It was a weak quarter for the company, with slow revenue growth and underwhelming revenue guidance for the next quarter.

Is Power Integrations buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Power Integrations's revenue to decline 42.1% year on year to $105.4 million, a deceleration on the 4.84% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.25 per share.

Power Integrations Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company missed Wall St's revenue estimates three times over the last two years.

Looking at Power Integrations's peers in the analog semiconductors segment, some of them have already reported Q1 earnings results, giving us a hint of what we can expect. ON Semiconductor delivered top-line growth of 0.76% year on year, beating analyst estimates by 1.79% and Texas Instruments reported revenue decline of 10.7% year on year, exceeding estimates by 0.22%. ON Semiconductor traded up 4.48% on the results, Texas Instruments was down 0.68%. Read our full analysis of ON Semiconductor's results here and Texas Instruments's results here.

There is still much uncertainty in the markets. The Federal Reserve's hawkish stance on rates, meant to tame inflation, remains a key market narrative. There is an added wrinkle now with troubles in the banking sector, triggered by Silicon Valley Bank's fairly sudden and surprising collapse. Given these, the question is whether higher rates (which dampen economic activity) and potentially less lending from the overall banking sector will trigger a recession. While some tech stocks have recovered year-to-date, most are still well off their 52-week highs. Power Integrations is down 6.45% over the last month, and is heading into the earnings with analyst price target of $87.8, compared to share price of $75.43.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.