Napco Security Technologies (NSSC) Faces Securities Class Action After Disappointing Earnings, Distributor Issues– Hagens Berman

Core Viewpoint - A securities class action lawsuit has been filed against Napco Security Technologies, Inc. after a significant drop in share price following disappointing Q2 2025 earnings and issues with its distribution network [1][3]. Group 1: Lawsuit Details - The lawsuit, Patel v. Napco Security Technologies, Inc., seeks to represent investors who purchased Napco securities between February 5, 2024, and February 3, 2025 [1][2]. - The lead plaintiff deadline for the lawsuit is set for June 24, 2025 [2]. Group 2: Financial Performance - Napco reported a 25% decline in equipment sales compared to the previous year’s Q2, alongside substantial declines in gross margin and gross profit for equipment revenue [3][6]. - The company attributed its poor performance to reduced sales to two major distributors, with one distributor actively working to reduce inventory [3][4]. Group 3: Investor Communication - The lawsuit alleges that Napco made false and misleading statements regarding its sales practices and forecasting abilities, failing to disclose critical information to investors [3][6]. - Despite assurances of achieving fiscal 2026 growth and margin targets, the company did not adequately disclose its inability to forecast product demand or the potential impact of demand fluctuations [6]. Group 4: Market Reaction - Following the announcement of the disappointing financial results, Napco's shares plummeted by $9.77, or 26%, in a single day, leading to analyst downgrades [4].