Impinj Shares Down 50% In 2 Months, But KeyBanc Still Doesn't Want You To Buy

Since KeyBanc Capital Markets downgraded IMPINJ Inc PI to Sector Weight in June, the stock has fallen 42 percent.

And KeyBanc isn’t so certain as to which way it’ll go from here.

“We need more visibility on when pushouts will return, more comfort that they’re not a sign of a larger trend, and a more attractive risk/reward before getting more constructive on the stock,” analyst Brad Erickson wrote in a Wednesday note.

Erickson cited particular concern surrounding delays in tag IC (integrated circuit) shipments, which could slow growth to the single digits for the next few quarters. But the assessment is confounded by a perceived opportunity in radio-frequency identification (RFID).

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

The Distant Amazon Tailwind

“Our positively bent thesis on Impinj remains that we’re in the early innings of RFID adoption,” he wrote. “In our recent anecdotal checks across large retailers, we haven't observed anything but ongoing rising RFID adoption, which, in our view, keeps our general long-term thesis intact.”

He even anticipates a potential buyer in Amazon.com, Inc. AMZN, though not for some time and not in significant proportion (see Erickson's track record here). Amazon’s principal engineer convinced him of the firm’s potential purchase of tens of billions of RFID units in the long term, but he’s not as certain that Amazon becomes a massive tag IC client so soon.

“In our view, both Impinj’s CEO and Amazon’s remarks at the RAIN meeting clearly indicated a need to broaden the scope of the RFID ecosystem,” Erickson wrote. “We believe Amazon’s fulsome approach to RFID may include driving the creation of such an ecosystem before it is willing to invest in item-level tagging throughout its operation.”

KeyBanc has assumed a relationship between Amazon and Impinj for some time, noting that Amazon Go likely uses technology similar to what Impinj sells. The earlier assumptions have led to significant stock pops for Impinj off Amazon news.

At time of writing, Impinj was trading at $31.72, up 2.5 percent on the day.