Why Are IPG Photonics Shares Plunging Today

  • IPG Photonics Corp IPGP reported fourth-quarter FY21 revenue growth of 8% year-on-year to $364.5 million, beating the consensus of $353.4 million.
  • Materials processing sales accounted for 87% of total revenue and increased 5% Y/Y with higher sales in welding, marking 3D printing, and cleaning applications.
  • Sales into Other applications increased 41% Y/Y, driven by the medical, advanced applications, and telecom strength. 
  • Emerging growth products sales were 38% of total revenue and increased 57% Y/Y.
  • The gross margin expanded by 190 bps to 45.5%. The operating margin expanded by 390 bps to 23.3%.
  • EPS of $1.21 beat the consensus of $1.19.
  • It held $1.5 billion in cash and equivalents.
  • "Growth in Europe, North America, and Japan as well as higher sales in emerging growth products drove results in the fourth quarter, allowing us to exceed our revenue guidance and grow year over year despite weakness in China," said Dr. Eugene Scherbakov, CEO. "Sales outside of China increased to 69% of our total revenue, a level we have not seen in many years, showing our progress in achieving a better balance in our business."
  • Share Buyback: The board approved a share buyback of up to $200 million.
  • Outlook: IPG sees Q1 revenue of $320 million- $350 million, below the consensus of $368.3 million. It sees Q1 EPS of $0.85 - $1.15, below the consensus of $1.28.
  • Price Action: IPGP shares traded lower by 7.91% at $135.08 on the last check Tuesday.
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