POWI: New Leadership And AI Data Center Demand Will Drive Future Upside

Narrative Update on Power Integrations

Analysts have modestly reduced their price targets on Power Integrations, with recent cuts to approximately $50 to $56 per share. This reflects softer near term guidance, even as they highlight attractive valuation multiples and confidence in the company’s product pipeline and long term growth prospects.

Analyst Commentary

Recent Street research reflects a constructive longer term view on Power Integrations, even as near term expectations are reset following the latest quarterly report.

Bullish Takeaways

• Bullish analysts highlight that the latest quarter was roughly in line with expectations, with revenue modestly ahead, supporting the credibility of management’s execution in a softer demand environment.
• Stronger performance in industrial end markets is seen as an early proof point that the company’s diversified product portfolio can drive growth beyond consumer exposed segments.
• The strengthening product pipeline and refreshed leadership team are viewed as catalysts that can support a return to sustainable double digit revenue growth over the medium term.
• Despite lower price targets, bulls argue that shares trade at attractive valuation multiples relative to the company’s long term growth profile and margin structure.

Bearish Takeaways

• Bearish analysts remain focused on revenue guidance that sits below prior Street expectations, reinforcing concerns about a slower near term demand recovery.
• The reset in price targets signals heightened skepticism around the pace of uptake for new products and the timing of an inflection in order trends.
• There is ongoing caution that near term execution will be constrained by macro headwinds and end market softness, which could limit operating leverage.
• Some bears worry that, even at reduced targets, the valuation still embeds a meaningful premium that requires flawless execution to justify over the next several quarters.

What's in the News

• Announced the appointment of veteran finance executive Nancy Erba as chief financial officer effective January 5, 2026, with interim CFO Robert Eric Verity to step down upon her start (company filing)
• Completed a $50 million share repurchase program, buying back a total of 1,064,705 shares, or about 1.89% of shares outstanding, including 919,337 shares in the most recent quarter (company announcement)
• Board approved an increase in the quarterly dividend to $0.215 per share for each quarter of 2026, which the company described as reflecting confidence in cash generation and balance sheet strength (company announcement)
• Issued fourth quarter 2025 revenue guidance in the range of $100 million to $105 million, which the company said would help reset investor expectations after recent demand headwinds (company guidance)
• Highlighted its high voltage PowiGaN gallium nitride technology for 800 VDC AI data center architectures and expanded collaboration with NVIDIA, including a new white paper released at the 2025 OCP Global Summit (company presentation)

Valuation Changes

• Fair Value Estimate remained unchanged at approximately $49.40 per share, indicating no adjustment to the intrinsic value assessment.
• The Discount Rate edged down slightly from 10.47% to 10.42%, reflecting a marginally lower assumed risk profile.
• Revenue Growth was effectively unchanged at about 9.92% annually, signaling stable expectations for top line expansion.
• Net Profit Margin stayed roughly stable at 15.54%, suggesting no material change in long term profitability assumptions.
• Future P/E eased slightly from 36.20x to 36.15x, indicating a modest reduction in the implied valuation multiple on forward earnings.