Power Integrations (POWI) Stock Forecast & Price Target

Power Integrations Inc is projected to achieve a 6% year-over-year revenue increase for the full year, supported by the resolution of ongoing tariff-driven inventory issues and a favorable growth trajectory entering the new year. The company is experiencing a positive shift in its end-market mix towards higher-value segments, which is expected to result in incremental gross-margin expansion and enhanced operating leverage, thereby increasing its addressable market. There is a growing demand in grid modernization, HV DC transmission, and metering, alongside a robust pipeline of design wins, indicating strong prospects for revenue growth in the datacenter, industrial, and automotive sectors that will contribute to improved financial performance.

Power Integrations Inc is experiencing a decline in gross margin, which is expected to decrease by 130 basis points to 53.8% due to higher input costs and a less favorable product mix, while operational expenses are forecasted to remain stable at approximately $47 million. Revenue guidance for the fourth quarter stands at $102.5 million, significantly below the $116 million consensus, primarily driven by inventory digestion in the appliance market and ongoing macroeconomic softness, resulting in revenue being about 37% below the peak levels seen in 2021. Moreover, the company faces several risks including supply chain uncertainties related to the COVID-19 pandemic, potential industry consolidation, and a demand slowdown in its key markets, which may hinder its growth and recovery prospects.