Shares of semiconductor designer Power Integrations (NASDAQ:POWI) fell 7.8% in the morning session after the company reported second-quarter results with revenue guidance for the next quarter coming in below Consensus. Operating margin also declined. On the other hand, revenue beat slightly in the quarter. Earnings per share also came in ahead and inventory levels improved. Overall, this was a mixed quarter for Power Integrations.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Power Integrations? Access our full analysis report here, it's free.
What is the market telling us:
Power Integrations's shares are somewhat volatile and over the last year have had 12 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move was 3 months ago, when the stock gained 8.7% on the news that the company reported first-quarter results that beat analysts' estimates for revenue, and earnings per share. However, gross margin and free cash flow missed. Revenue guidance for the next quarter came in above Consensus estimates. It was a positive quarter for the company, with management adding that "reduction in distributor inventories combined with improved order trends indicates that while end-market demand remains subdued, revenues have bottomed and a cyclical recovery is underway."
Power Integrations is up 16.6% since the beginning of the year, but at $83.47 per share it is still trading 15.6% below its 52-week high of $98.89 from July 2023. Investors who bought $1,000 worth of Power Integrations's shares 5 years ago would now be looking at an investment worth $2,300.
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