IPG Photonics Likely To Gain From China's Recovery, Medical And EV Applications Analyst Says Post Q4

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  • Benchmark analyst Mark Miller maintained IPG Photonics Corp IPGP with a Buy and raised the price target from $130 to $140.
  • IPG's Q4 sales and adjusted earnings of $1.08 per diluted share were upsides to investor expectations
  • IPG posted charges and adjustments related to long-lived assets in Russia, an asset divestiture, and a foreign exchange gain. 
  • China and Germany's sales were down double digits sequentially and Y/Y, but North American and Japanese sales were up sequentially.
  • Revenue declined in China due to lower demand in cutting and marking applications, partially offset by growth in welding and cleaning applications. Currency translations and COVID-related restrictions also negatively impacted revenue in China.
  • Sales decreased slightly in North America year-over-year, as growth in cutting, welding, and medical applications was offset by lower sales in non-laser systems, advanced applications, and the divestiture of the telecom business.
  • High-power laser sales fell by a double-digit percent sequentially and Y/Y, while pulsed, QCW, other lasers, and other product sales were up sequentially. The decline was due to softer demand in cutting, partially offset by growth in welding applications.
  • IPG ended 2022 with a record backlog of $811 million. 
  • Once again, demand was strong for medical and EV applications. 
  • A recovery in China combined with growth in EV and medical sales, and recently introduced products are seen driving 23% Y/Y bottom line growth to an EPS of $6.38 in 2024.
  • Price Action: IPGP shares traded higher by 1.55% at $127.49 on the last check Wednesday.
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