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One thing we could say about the analysts on Power Integrations, Inc. (NASDAQ:POWI) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the consensus from Power Integrations' six analysts is for revenues of US$464m in 2024, which would reflect a discernible 3.3% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to nosedive 25% to US$0.84 in the same period. Before this latest update, the analysts had been forecasting revenues of US$598m and earnings per share (EPS) of US$1.93 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.
View our latest analysis for Power Integrations
It'll come as no surprise then, to learn that the analysts have cut their price target 14% to US$76.60.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 2.7% by the end of 2024. This indicates a significant reduction from annual growth of 10% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 16% annually for the foreseeable future. It's pretty clear that Power Integrations' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Power Integrations. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Power Integrations' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Power Integrations going out to 2025, and you can see them free on our platform here.