Impinj Hits A High Note As Analyst Raises Forecast, Citing Retail RFID Tag Expansion

Needham analyst James Ricchiuti raised the price target of Impinj Inc PI to $115 from $85 while maintaining a Buy rating.

The bullish stance reflects PI’s expectation of better-than-expected fourth-quarter 2023 results.

This Wednesday, PI said it now projects revenue over $70 million, vs. prior guidance of $65.5 million to $68.5 million (vs. consensus of $67.02 million) and adjusted EBITDA of more than $2.5 million, vs. previous guidance of ($0.9) million to $0.7 million in the quarter.

PI indicated that the upside was led by a stronger-than-expected increase in endpoint revenue and sequential growth in systems revenue (vs. prior guidance for a decline in Systems revenue), writes the analyst. 

Also, management believes that “PI is in the early innings of capitalizing on opportunities it has developed with lighthouse enterprise customers and over time expects to leverage these solutions in repeatable applications with other partners,” says the analyst. 

Mentioning the takeaways from NGC 2024, the analyst notes that while management said the retail apparel inventory overhang was deeper and longer than PI expected, the tone coming out of meetings with the company suggests that the destocking is nearing an end.

The analyst expects PI to return to a strong growth trajectory in the second half of FY24, which will continue in FY25, led by continued momentum from the lighthouse enterprise customers and faster progress that will bring down the endpoint IC channel inventories across the broader retail apparel market.

Also, the analyst expects PI’s RAIN RFID business to witness growth from expanding retail use cases for self-checkout, loss detection, and general merchandise retailing. 

Consequently, Ricchiut is raising FY24 revenue estimates to $329.0 million (from $317.5 million) and introduced an FY25 revenue estimate of $400.5 million, assuming 22% growth and significant earnings leverage with the higher volumes.

Price Action: PI shares are trading higher by 3.49% at $94.25 on the last check Thursday.

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