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IPG Photonics (IPGP) to Post Q1 Earnings: What to Expect?

IPG Photonics Corporation IPGP is set to report first-quarter 2021 results on May 4.

For the first quarter, IPG Photonics expects sales to be $310-$340 million. The Zacks Consensus Estimate for revenues is currently pegged at $326.41 million, which indicates an improvement of almost 31% from the year-ago reported figure.

The company projected earnings between 90 cents and $1.20 per share. The Zacks Consensus Estimate for earnings has remained stable in the past 30 days at $1.07 per share, which suggests growth of 167.5% from the year-ago quarter.

Management anticipates gaining from a solid order flow for frame agreements and bookings in China, which was strong “in the first weeks of the year”. Also, improving investment cycle, led by equipment upgrades, automation, growing demand for flexible processing and higher efficiency, remain tailwinds.

IPG Photonics Corporation Price and EPS Surprise

IPG Photonics Corporation price-eps-surprise | IPG Photonics Corporation Quote

Factors Likely to Have Influenced Q1 Performance

IPG Photonics’ efforts to expand into new end-markets like advanced applications (3D Printing and micro-materials processing), renewable energy, electric vehicle battery processing and systems, ultra-high power cutting, and medical are likely to have contributed to the to-be-reported quarter’s performance. Moreover, strength in new solutions holds promise.

Incidentally, in the fourth-quarter 2020, IPG Photonics witnessed strong growth in medical laser business. Notably, sales of medical applications were up on a year-over-year basis. The company has been ramping up sales of thulium fiber lasers solution and consumable fibers that are utilized in urology and other soft tissue applications. The momentum is likely to have continued in the first quarter driven by growth in medical device manufacturing and installed systems.

Moreover, development of new medical applications utilizing fiber lasers for urological and dental procedures may have aided adoption of laser-based medical solutions. This, in turn, is likely to have driven first-quarter performance.

Markedly, the company’s investments to extend the use of medical lasers for transformative new products including mid-infrared lasers for inspection, spectroscopy and sensing applications, and new medical treatments hold promise in the longer haul. This, in turn, might have impeded margin expansion in the first quarter.

However, incremental adoption of latest ultra-compact YLR-U series of lasers, and 30-kilowatt lasers and ultra-high-power optical heads is anticipated to have contributed to the top line.

Besides, continued strength in advanced applications, with robust demand for semiconductor and scientific applications, may have favored the first-quarter performance.

Likewise, improving mix of ultra-high power single mode lasers and amplifiers for defense applications is likely to have benefited the to-be-reported quarter’s performance. Further, momentum in higher power products in core materials processing domain and strength in new solutions hold promise.

Also, recovery across industrial demand in China for high power CW and pulsed laser equipment is likely to get reflected in the first-quarter top line.

However, weaker demand trends for several product categories and stiff pricing competition are likely to have put pressure on IPG Photonics’ first-quarter performance.

Furthermore, coronavirus crisis-led sluggishness across select end-markets may have dented the to-be-reported quarter’s profitability.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for IPG Photonics this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Although IPG Photonics has a Zacks Rank #3, an Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks, which you may consider, as our proven model shows that these have the right mix of elements to beat estimates this time around:

Vishay Intertechnology, Inc. VSH has an Earnings ESP of +5.22% and a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Microchip Technology Incorporated MCHP has an Earnings ESP of +1.44% and a Zacks Rank #2, presently.

CDW Corporation CDW has an Earnings ESP of +0.51% and a Zacks Rank of 2.

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Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

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Microchip Technology Incorporated (MCHP): Free Stock Analysis Report
 
Vishay Intertechnology, Inc. (VSH): Free Stock Analysis Report
 
CDW Corporation (CDW): Free Stock Analysis Report
 
IPG Photonics Corporation (IPGP): Free Stock Analysis Report
 
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