A Hold recommendation has recently been issued to original equipment manufacturer (OEM) of semiconductor power conversion ICs Power Integrations, Inc. (POWI) by Zacks senior semiconductor analyst Ken Nagy, CFA.  Here's what his latest update had to say:

'Power Integrations is an original equipment manufacturer (OEM) of semiconductor power conversion ICs. The California Energy Commission (CEC) recently pushed out an industry mandate that should create an earnings catalyst in 2007. A solid product portfolio, new patents and product launches, along with the recently adopted worldwide energy standards should drive growth.

'POWI shares are trading at a 26.3x multiple of our 2008 EPS estimate (P/E). The company has a solid IP portfolio and continues to launch new products, which should drive revenue in 2008. The company had very strong design win activity in the last few quarters, although revenue on these design wins may not be recognized in the near term.  While the new energy standards should boost sales in the first half of 2008, increased litigation expenses will continue to pressure the bottom-line.

'The decision to push up the date of the CEC mandate by six months is a moderate negative but it will just delay revenue, it will not be lost. The Option inquiry brings up a question of management integrity, which is almost always a negative. As a result, we believe the shares will trade around the current valuation metrics. We are setting a target price of $35.00, which corresponds to a P/E multiple of 26.9x.

'The company has restated years 1998 to 2004 as a result of an options investigation and has been re-listed on the exchange. The timing and magnitude of the revenue growth, along with on-going legal expenses are over hangs on the stock. We continue to remain cautious and rate the shares of POWI a Hold.'