Why Power Integrations (POWI) Stock Is Trading Lower Today

Kayode Omotosho /
2023/11/08 9:26 am EST

What Happened:

Shares of semiconductor designer Power Integrations (NASDAQ:POWI) fell 14.9% in the morning session after the company reported third quarter results that missed Wall Street's expectations for revenue and EPS. Similarly, for the next quarter, management expected a sequential revenue decline, with the sales outlook falling below Consensus estimates. The company attributed the weakness to a slowdown in home sales and pandemic-driven advance appliance purchases, as well as an unexpected cancellation by an OEM aiming to reduce charger and component inventories, impacting both Q3 revenues and Q4 backlog in computer and communications categories. Overall, this was a difficult quarter for Power Integrations although the company isn't alone when it comes to semis names that have reported mediocre or worrisome quarters.

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 7 moves greater than 5%. But moves this big are very rare even for Power Integrations and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 6 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 down 6.1% since the beginning of the year, and at $67.26 per share it is trading 32% 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 $2,310.

Do you want to know what moves the stocks you care about? Add them to your StockStory watchlist and every time a stock we cover moves more than 5%, we provide you with a timely explanation straight to your inbox. It's free and will only take you a second.