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Why Impinj Stock Rose 10.8% Today

By Anders Bylund – Jan 11, 2022 at 12:42PM

Key Points

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This tech company's bullish revenue update may point to strong results from its core customers.

What happened

Shares of Impinj (PI 0.83%) closed Tuesday's trading session 10.8% higher, propelled by updated revenue guidance for the fourth quarter.

So what

The maker of radio-frequency identification (RFID) tracking chips and data readers now expects fourth-quarter revenues to exceed $52 million. That's a 10.6% boost over the midpoint of management's existing guidance for this period. As a result, the year-over-year sales-growth target increased from 29% to 43%.

A cartoon-style rocket takes off from an outstretched hand.

Image source: Getty Images.

Now what

Impinj didn't provide any information on why the quarter's top-line results came in above expectations. Generally speaking, strong sales of Impinj's RFID tags and systems should indicate a bullish mood in the company's target sectors, as its customers beef up their RFID-based tracking infrastructure.

The most likely reason for this guidance boost is that retailers and shipping services experienced a robust holiday quarter. Financial reports in the upcoming earnings season will either confirm or debunk this theory.

The stock has now gained 56.4% in 52 weeks. Impinj is not a cheap investment these days, trading at 11 times trailing sales and 365 times forward earnings. You should think twice before taking action on Impinj's promising growth story at these nosebleed-inducing prices, but it could still be a robust long-term play for investors who don't mind a bit of pricing risk..

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy.

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