What happened
Shares of IPG Photonics (IPGP 0.35%) charged sharply higher on Tuesday, surging as much as 17.4%. As of 10:34 a.m. ET, the stock was still up 17.2%.
The catalyst that sent the industrial laser maker higher was its quarterly earnings report, which was far better than expected.
So what
For the first quarter, IPG Photonics generated revenue of $370 million, which climbed 7% year over year. This resulted in earnings per share (EPS) of $1.31, compared with EPS of $1.26 in the prior-year quarter.
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To put those numbers in context, analysts' consensus estimates were calling for revenue of $336.5 million and EPS of $0.97, so the results easily eclipsed investor expectations.
Its performance was boosted by strong demand across segments, with applications in Europe, North America, and Japan all fueling the results. The company also cited increased laser welding adoption, particularly in electric vehicle (EV) manufacturing, which helped drive record welding revenue for the quarter. This was all the more remarkable in the face of a slowdown of demand in China, as revenue from the country decreased 35%.
Management noted that due to "increased geopolitical risks" it reduced its dependence on manufacturing in Russia, while increasing capacity in North America and Western Europe.
Now what
IPG Photonics noted that during the first quarter its book-to-bill ratio -- which compares orders received to the amount billed during a given period -- remained above 1, which suggests that future results will continue to be solid. That said, the company also had received several orders that wouldn't ship until after the end of the second quarter, forcing the company to rein in its guidance.
As a result, the company is forecasting revenue in a range of $355 million to $385 million, or essentially flat year over year at the midpoint of its guidance. IPG is also expecting EPS in a range of $0.95 to $1.25, which would represent a decline from the $1.29 it delivered in the prior-year quarter.
Given the economic and geopolitical uncertainty, IPG Photonics delivered a robust performance and investors cheered the results. For those with a sufficient investing time horizon, this technology stock is a solid buy.
