Up 300% Since Last Year's IPO, Is It Time To For Impinj Shares To Take A Breather?

“Nothing is wrong; people just now ‘get’ the Radio-frequency identification (RFID) opportunity,” Pacific Crest Securities analyst Brad Erickson said as he downgraded IMPINJ Inc (NASDAQ: PI) to a Sector-Weight rating.

The stock, up over 100 percent since early March, has too high a risk/reward ratio to justify currently holding it, according to Erickson.

“With the July 18-20 RAIN event approaching, shares could move higher near term, but with the upside now likely required to hold the stock, we think risk/reward is no longer favorable enough to justify Overweight with shares trading at 6.5x EV/revenue, a 44% premium to the group.”

Is The RFID Opportunity Already Priced In?

Erickson believes investors have already noticed the opportunities in Rain RFID and the potential growth/partnership opportunities it presents across several sectors. While he noted that Impinj is likely still the leader in this industry, the 108-percent stock run since March demonstrates investors have already priced this in.

Impinj Still Has A Strong Pipeline

During management meetings, Erickson stated, “We believe the Company’s pipeline of potential customers is as strong as ever, though commentary suggests timing of deal closures continues to be difficult to forecast.” He highlighted how any sales-cycle lengthening could negatively impact gross-margin upside.

Overall, while further upside is possible if Impinj were to partner with Amazon.com, Inc. (NASDAQ: AMZN) or Kaiser (could be announced at July 18–20 RAIN annual conference), Erickson sees too many risks to maintain an Overweight rating.

At time of publication, shares of Impinj were down 7.18 percent at $55.11.

Related Links

Morgan Stanley Downgrades Impinj Following Nearly 50% Rally Since May 4

Short Squeeze Could Be Driving Impinj's Rebound

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