Buy Rating Affirmed for IMPINJ Amid Strong IoT Market Position and Expansion Potential
Mark Lipacis has given his Buy rating due to a combination of factors surrounding IMPINJ’s strong positioning in the growing Internet of Things (IoT) market and its impressive financial prospects. IMPINJ, as a key supplier in the emerging IoT sector, is poised to capitalize on the expansive growth expected in this market, which could reach tens of billions of units. Lipacis anticipates significant operational margin expansion for IMPINJ, by as much as 2500 basis points over the next decade, bolstering the company’s profitability in a market with relatively low penetration rates for RAIN RFID (Radio-frequency identification) technology. This sets the stage for IMPINJ to become one of the most compelling growth narratives within the analog and microcontroller unit (MCU) complex.
Furthermore, Lipacis underscores the consolidation within the analog/MCU space as a driver for higher margins, free cash flow, and capital returns, all of which bode well for IMPINJ. He also points to the cyclical nature of the semiconductor industry to support his view, predicting that IMPINJ will outperform the broader market through 2025 following its earnings trough. Additionally, he highlights IMPINJ’s unique position as a comprehensive supplier in the RFID tag ecosystem, which not only leads the market but also boasts a vertically integrated model—spanning from reader ICs to software. Despite only a 3% penetration of a potential total addressable market of 3 trillion units, the expectation of a 15% compound annual growth rate in the RFID tag segment further solidifies the bullish stance. Lastly, Lipacis’s $160 price target reflects these growth prospects, pegging the company’s enterprise value-to-sales ratio in line with current levels. |
