IPG Photonics Takes a Breather

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IPG Photonics (Nasdaq: IPGP  ) caught everybody by surprise three months ago. And by "everybody," I really mean everybody -- fourth-quarter sales and earnings shaped up so much better than even the company's own management expected that it had to preannounce results with earnings guidance boosted by a whopping 68%.

Since that day, the hits have simply kept coming, making fellow Fool Eric Jhonsa look really smart for picking the laser-components builder as the best tech stock for 2011. The stock has more than doubled year-to-date, even after a slight dip on this morning's first-quarter earnings news.

Yup, the bottle rocket lost about 3% of altitude in morning trading. You see, the report was merely great and not mindblowingly awesome.

Earnings of $0.47 per share beat the analyst consensus by a mere $0.04 per share, 95% year-over-year sales growth outdistanced the Street by just 5%, and second-quarter guidance was just a little bit higher than the current consensus.

As you can see, a whole lot of good vibrations had already been priced into the stock. Sales were strong across all geographies and product categories -- with particular strength in China and Europe, and a focus on marking, welding, and cutting applications.

Rivals Newport (Nasdaq: NEWP  ) and Coherent (Nasdaq: COHR  ) are riding high on a resurgent semiconductor industry, but IPG's exposure to that particular market is limited. The company's fiber lasers offer advantages over traditional CO2-based lasers. Markets like China and Japan are embracing the new technology quickly, and others follow suit.

Sector giant Rofin-Sinar (Nasdaq: RSTI  ) is threatened by this newfangled fiber-laser surge and fights back by developing its own fiber lasers and buying smaller players in the field. Meanwhile, IPG simply enjoys the high demand, laughing all the way to the bank.

Is IPG's rocket ride running out of fuel, or will the second quarter astonish investors again? Add IPG Photonics to your watchlist and you'll be the first to know. And then you can discuss the company's future in the comments below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. IPG Photonics is a Motley Fool Rule Breakers recommendation. Rofin-Sinar Technologies is a Motley Fool Hidden Gems selection. The Fool owns shares of IPG Photonics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (2) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 04, 2011, at 12:52 PM, omt68 wrote:

    Of course compettitors to IPG Photonics fiber optic laser will appear over time. That in itself should not be too worrisome.

    The real disruption lies in the fiber optic part of laser technology, and here IPG Photonics is ahead of the competition.

    Once the Auto industry and other mass manufacturing industries discover the hugh advantages of fiber optic lasers over conventional lasers, and they get back into high gear, the only question to the succes of IPG Photonis is going to be the conventional one: Can management execute?

    My answer to that question is: I just bought a good chunk of shares in IPGP!

  • Report this Comment On May 17, 2011, at 11:19 AM, dmarkiv wrote:

    I get tired of th talking heads beating down companies that produce. Motley Fool has helped me decide that this may be a rocket type stock. I am holding off buying until I see a move to the upside. Maybe around $67.

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