Stifel cuts Power Integrations target to $70, keeps Buy rating

On Thursday, Stifel analysts adjusted their outlook on Power Integrations (NASDAQ:POWI), a leading provider of high-performance integrated circuits used in power conversion. The firm lowered its price target on the company’s shares to $70 from the prior target of $90, while the stock currently trades at $44.92. Despite the reduction, Stifel maintained a Buy rating on the stock, indicating a continued positive outlook for the company’s future performance. According to InvestingPro analysis, the stock is currently trading near its Fair Value, with 12 additional exclusive insights available to subscribers.

The decision to lower the price target was accompanied by commentary from Stifel analysts, highlighting the company’s robust financial position. They pointed out that Power Integrations has a strong balance sheet, as evidenced by its net cash per share of $5.25 in the fourth quarter of 2024. This observation aligns with InvestingPro data showing an impressive current ratio of 9.29 and minimal debt-to-equity ratio of 0.02. This financial strength, according to the analysts, positions the company favorably for sustainable, long-term annualized growth, which could lead to a valuation premium in the current difficult business climate. This premium could be realized in the open market or through other avenues such as mergers and acquisitions.

Stifel’s revised 12-month target price of $70 reflects a multiple of 6.7 times the company’s expected enterprise value to sales for the calendar year 2026. The company currently trades at an EV/EBITDA multiple of 42.87x and maintains a strong dividend track record, having raised dividends for 12 consecutive years. This valuation is based on the firm’s assessment of the company’s growth prospects and its ability to navigate the challenging environment. Get deeper insights into Power Integrations’ valuation metrics and more with a comprehensive Pro Research Report, available exclusively on InvestingPro.

The analysts’ commentary underscores a belief that despite broader market challenges, certain companies like Power Integrations with solid financial foundations and growth potential are still attractive investment opportunities. The maintenance of the Buy rating suggests that Stifel sees the current share price as a good entry point for investors looking to benefit from the company’s long-term growth trajectory.

Power Integrations’ shares are being watched closely by investors following this update from Stifel, as market participants consider the implications of the revised price target and the firm’s confidence in the company’s enduring growth prospects.

In other recent news, Power Integrations Inc. reported its Q4 2024 earnings, revealing an 18% year-over-year revenue increase to $105 million, though this figure fell short of the anticipated $119.74 million. The company’s non-GAAP earnings per share (EPS) was $0.30, missing the expected $0.40. Despite the revenue growth, Power Integrations experienced a full-year revenue decline of 6% to $419 million, attributed to challenges in the broader market. The company is optimistic about its GaN technology driving future growth, especially in the automotive and industrial sectors. Additionally, Power Integrations announced that CEO Balu Balakrishnan intends to retire, with a search for his successor underway. The company also welcomed Greg Lowe to its Board of Directors, bringing extensive experience in analog and power semiconductors. Looking ahead, Power Integrations forecasts flat sequential revenue growth for Q1 2025, with potential fluctuations of ±5%.

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