Impinj Stock skyrockets on earnings beat
Shares of Impinj (PI +6.90%) sent a clear signal to Wall Street on Thursday. The stock rose as much as 34.4% in the morning, backing down to a still-impressive 24% gain as of 2:45 p.m. ET. The maker of radio-frequency identification (RFID) devices and systems posted robust third-quarter results on Wednesday evening, supported by rosy guidance for the next quarter.
Installing an RFID tag. Image source: Getty Images.
Impinj's Q3 by the numbers
Let's start with the raw headline numbers. Impinj's third-quarter revenues fell 4.8% year over year, landing at $65 million. On the bottom line, the year-ago period's adjusted earnings of $0.34 per share dropped to a breakeven showing. However, your average Wall Street analyst would have settled for a net loss of $0.10 per share on sales near $64.8 million. Impinj edged out both of these analyst targets.
The fourth-quarter guidance also looked rather gloomy, with negative short-term growth rates across sales and various profit metrics. Even so, the midpoint of management's guidance targets -- an adjusted net loss of $0.01 per share on sales in the neighborhood of $67 million -- came in well above the current Street views.
NASDAQ: PI
Key Data Points
Impinj's clearer outlook: Budding signs of stability
More to the point, Impinj CEO Chris Diorio gave investors plenty of reason for long-term optimism. "Looking forward, we see green shoots in the fourth quarter," Diorio said on the earnings call. "Expect our full year 2023 endpoint integrated circuit (IC) volumes to be consistent with our industry's historical 29% unit volume compound annual growth rate (CAGR), anticipated market rebound in 2024, and remain a growth leader despite the difficult macro."
In other words, Impinj's leadership expects sharply accelerated growth in RFID-tag unit sales in 2024 and beyond. The purported RFID revolution ran off the rails during the COVID-19 crisis and its assorted economic fallout effects, but it looks like the business is getting back on track again.
All told, the stock price is down by 44% year to date, even after today's agile jump. Shares may look expensive at 65 times forward earnings, but that ratio was calculated from earnings projections near the breakeven level. Imagine a healthier bottom line with double-digit net profit margins, and the P/E ratio quickly drops to a reasonable 40 times earnings. I think the company can reach that point in a year or two, assuming Diorio's "green shoots" stay healthy.
