Impinj Falls 36% in 3 Months: Should You Buy, Sell or Hold the Stock?

Core Viewpoint - Impinj's stock has significantly underperformed in the past three months, dropping 36.1%, while the broader market and its peers have shown positive returns [1][3]. Group 1: Stock Performance - Impinj shares have declined 36.1% over the last three months, contrasting with the S&P 500's return of 0.8% and the Zacks Computer and Technology sector's return of 2.9% [1]. - The company has also lagged behind its Zacks Electronics – Semiconductors peers, which have seen increases of 29% to 87.6% [1]. Group 2: Reasons for Underperformance - The primary reason for the stock's decline is disappointing guidance for Q4 2024, with management indicating a seasonal drop in endpoint IC revenues and delays in major projects affecting revenues [3]. - The company is experiencing predictable trends in the supply chain and logistics sectors, which are expected to impact its E-family reader ICs [3]. Group 3: Valuation and Market Position - Impinj currently trades at a forward 12-month price-to-sales (P/S) multiple of 9.54x, above the industry average of 8.25x, indicating a premium valuation that may limit immediate upside potential [5]. - The stock is trading below the 50-day moving average, suggesting a bearish trend in the near term [8]. Group 4: Growth Potential - Despite short-term challenges, Impinj's fundamentals remain strong, with its RFID technology addressing critical needs across various industries [10]. - The integration of cloud and software capabilities enhances its RAIN technology, creating recurring revenue streams and differentiating the company in the market [11]. - Emerging use cases, such as apparel and food tagging, highlight the company's relevance and potential for growth in high-demand areas [12][15]. Group 5: Future Outlook - Impinj's M800 endpoint ICs have seen robust adoption, with continued growth expected in 2025 despite current project delays [16]. - Analysts project a year-over-year revenue growth of 19.5% and earnings growth of 33.9% for 2025, with the stock surpassing earnings consensus in the last four quarters [18]. - The company's leadership in RFID technology and expansion into software and cloud services support a solid growth trajectory, justifying a hold on the stock for long-term investors [19][20].