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Bear of the Day: Impinj, Inc. (PI)

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Impinji Inc. (PI - Free Report) , a Zacks Rank #5 (Strong Sell), is a provider of referral and information network radio frequency identification solutions to the retail, pharmaceutical, healthcare, food and beverage and other industries. The company's products include Indy Reader Chips which consists of integrated radio chips and supporting SDKs; Monza Tag Chips, which deliver memory options and extended features to RFID tags and Speedway fixed RFID readers and antennas for RFID-based information. Impinj, Inc. is based in Seattle, Washington.

Recent Earnings

The company reported Q3 17 earnings on November 1, where they missed the Zacks consensus earnings estimate but came in line with the revenue estimate.  To compound the earnings misses, management guided Q4 below the consensus estimates due to supply shortages for readers and gateway products.  Further impacting the top line, the company’s pricing power fell below that of their preceding quarters.  Lastly, lower total volumes are also negatively weighing on the company.  But management expects these issues to turn around sometime in the second half of 2018.  

Management’s Take

According to Chris Diorio, Impinj, co-founder and CEO, “We delivered a solid third quarter with strong reader and gateway volume growth.  Our 2017 endpoint IC unit guidance remains unchanged at between 7.0 and 7.2 billion units. We see indicators of growing adoption for RAIN, and the Impinj platform, however, we expect to see a slight decrease in endpoint IC volumes in the second half of the year. We remain confident in our market opportunity and will continue investing in and delivering solutions and enterprise partnerships that leverage our platform, accelerate adoption and drive scale in this gigantic market opportunity.”

Price and Earnings Consensus Graph

Due to the negative quarterly guidance and other issues facing the company at present, the stock price and future earnings estimates have significantly deteriorated.

Declining Earnings Estimates

Over the past 30 days, earnings estimates for Q4 17, Q1 18, FY 17 and FY 18 have all seen negative revisions; Q4 17 fell from $0.02 to -$0.16, Q1 18 dropped from -$0.06 to -$0.21, FY 17 was reduced from $0.05 to -$0.16, and FY 18 plummeted from $0.18 to -$0.42.

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