Napco (NSSC) Navigates Distributor Inventory Shifts Amidst Ongoing Investor Lawsuit – Hagens Berman

Core Viewpoint - Napco Security Technologies, Inc. is facing significant challenges, including a securities class action lawsuit and declining sales, which have raised concerns about its distribution network and forecasting capabilities [1][3][4]. Financial Performance - For the third quarter of fiscal year 2025, Napco reported revenue of $43.96 million, which was above Wall Street's expectations, but represented a year-on-year decline of 10.8% [2]. - The company experienced a substantial 25% drop in equipment sales in the second quarter of fiscal 2025 compared to the same period the previous year, alongside declines in gross margin and gross profit [6]. Legal Issues - A class action lawsuit has been filed against Napco, representing investors who purchased securities between February 5, 2024, and February 3, 2025, following a significant drop in stock price due to disappointing earnings disclosures [3][4]. - The lawsuit alleges that Napco made false and misleading statements regarding its sales forecasts and the ability to manage demand fluctuations, which were not disclosed to investors [4][5]. Market Reaction - Following the negative earnings report on February 3, 2025, Napco's stock price fell sharply, erasing $9.77 per share in value and prompting analysts to downgrade their ratings on the company [7]. Investigative Actions - Hagens Berman, a securities litigation firm, is investigating potential securities fraud claims against Napco, emphasizing the ongoing concerns about the company's sales performance and distribution management [8].