The stock rose $2.94, or 10.1 percent, to $32.10. Shares have traded in a 52-week range of $21.40 to $35.03.
Banc of America Securities analyst Sumit Dhanda raised his rating to "Buy" from "Neutral" and his price target to $36 from $28.50. The new target implies he expects the stock to rise about 24 percent over Wednesday's $29.16 close.
San Jose, Calif.-based Power Integrations makes power chips used in consumer goods such as personal computers and cell phones, as well as industrial electronics.
"A national rollout mid-year of a tougher version of the California mandate that originally sparked Power Integrations' recent growth, to be closely followed by similar initiatives in Europe, should improve Power Integrations' design win momentum in the second half of 2008," Dhanda said in a note to clients.
The new standards -- as well as tough voluntary ones -- will likely favor integrated switch makers, such as Power Integrations, over current linear power supply makers and other alternatives, he said.
Dhanda currently has an "Overweight" rating on the sector. The Power Intergrations upgrade comes as he upgraded six other chip-related stocks, including Intel Corp.
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