Market forces rained on the parade of Power Integrations, Inc. (NASDAQ:POWI) shareholders today, when the analysts downgraded their forecasts for next year.   Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.  

Following the latest downgrade, the six analysts covering Power Integrations provided consensus estimates of US$464m revenue in 2024, which would reflect a measurable 3.3% decline on its sales over the past 12 months.       Statutory earnings per share are supposed to plunge 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 sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.    

View our latest analysis for Power Integrations

NasdaqGS:POWI Earnings and Revenue Growth November 12th 2023

It'll come as no surprise then, to learn that the analysts have cut their price target 14% to US$76.60.    

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry.     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.    Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 16% per year.  So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Power Integrations is expected to lag 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.  

With that said, the long-term trajectory of the company's earnings is a lot more important than next year.   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.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.