IPG Photonics (IPGP) shares soared 3.3% in the last trading session to close at $238.71. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock’s 6.7% gain over the past four weeks.
The increase in share price can be attributed to growing optimism surrounding rebound in industrial spending environment. Solid traction witnessed in China bookings’ growth along with strength in demand for fiber & diode lasers, fiber amplifiers and transceivers portfolio is likely to improve revenue opportunities for IPG Photonics.
Also, the company is expected to gain from its new LightWELD handheld laser welding system. The LightWELD product line is aimed at facilitating fabricators to tap gains from increased flexibility, precision and simplified use powered by laser-based solutions compared with conventional welding products.
Moreover, as industrial manufacturers look to curb carbon emissions, it could boost demand for the company’s energy-efficient laser solutions.
IPG Photonics’ endeavors to expand into new end-markets like advanced applications (3D Printing and micro-materials processing), electric vehicle battery processing and systems, ultra-high power cutting, and medical bodes well for the top line growth.
Price and Consensus
This high-powered laser maker is expected to post quarterly earnings of $1.07 per share in its upcoming report, which represents a year-over-year change of +167.5%. Revenues are expected to be $326.41 million, up 31% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For IPG, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock’s price usually doesn’t keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on IPGP going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank 3 (Hold). You can see
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