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1. Company Snapshot

1.a. Company Description

IPG Photonics Corporation develops, manufactures, and sells various high-performance fiber lasers, fiber amplifiers, and diode lasers used in various applications primarily in materials processing worldwide.The company's laser products include hybrid fiber-solid state lasers with green and ultraviolet wavelengths; fiber pigtailed packaged diodes and fiber coupled direct diode laser systems; high-energy pulsed lasers, multi-wavelength and tunable lasers, and single-polarization and single-frequency lasers; and high-power optical fiber delivery cables, fiber couplers, beam switches, chillers, scanners, and other accessories.It also provides erbium-doped fiber and Raman amplifiers, and integrated communications systems, which are deployed in broadband networks; and ytterbium and thulium specialty fiber amplifiers and broadband light sources.


In addition, the company offers integrated laser systems; 2D compact flat sheet cutter systems and multi-axis systems; welding seam stepper and picker, a fiber laser welding tool; high precision laser systems; specialized fiber laser systems; and optical transceiver and transponder modules for interconnecting electronic equipment, including Ethernet switches, IP routers and DWDM/SONET/SDH optical transport modules within telecommunications, cable multi-system operators, and data center networking applications.It's lasers and amplifiers are also used in materials processing, communications, and medical and advanced applications.The company markets its products to original equipment manufacturers, system integrators, and end users through direct sales force, as well as through agreements with independent sales representatives and distributors.


IPG Photonics Corporation was founded in 1990 and is headquartered in Oxford, Massachusetts.

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1.b. Last Insights on IPGP

IPG Photonics' recent performance faced negative drivers, including a mixed institutional investor sentiment. Ensign Peak Advisors Inc reduced its holdings by 10.9%, selling 1,100 shares, while Creative Planning and Brandes Investment Partners LP increased their stakes by 28.6% and 87.8%, respectively. Despite Q3 earnings beating estimates, with EPS of $0.35 and revenue growth in materials processing and medical applications, Fibre Devices Ltd Ip sold 16,559 shares. Analysts have a consensus "Hold" rating, with two sell, three hold, and four buy ratings.

1.c. Company Highlights

2. IPG Photonics' Q3 2025 Earnings: A Strong Performance

IPG Photonics reported a robust third quarter, with revenue reaching $251 million, at the top end of expectations, and up 8% year-over-year. The company's GAAP gross margin was 39.5%, while adjusted gross margin was 39.8%, above guidance. Earnings per share (EPS) came in at $0.35, significantly beating estimates of $0.16. The strong performance was driven by growth in battery production, stable general industrial demand, and increasing adoption in additive manufacturing applications.

Publication Date: Nov -08

📋 Highlights
  • Q3 Revenue Performance:: Revenue reached $251 million, meeting the top of expectations, flat sequentially, and up 8% year-over-year, with adjusted gross margin at 39.8%, exceeding guidance.
  • Medical Segment Growth:: FDA clearance for next-gen thulium laser systems expected to drive shipments in Q4, targeting 2-3x revenue growth in urology over 2-3 years post-launch.
  • E-Mobility Expansion:: 25% year-over-year growth in e-mobility welding, with global share gains in Asia, Europe, and the US, driven by battery and stationary storage demand.
  • Fourth-Quarter Guidance:: Revenue projected at $230–$260 million, adjusted EBITDA of $21–$38 million, and adjusted gross margin of 36–39%, supported by industrial output and operational efficiency.
  • Strategic Investments:: Operating expenses remain flat but higher than prior year, reflecting investments in medical, micromachining, defense, and CROSSBOW, with defense margins expected to exceed corporate averages.

Revenue Growth Drivers

The company's growth initiatives are gaining traction, with notable progress in medical, micromachining, and defense. In medical, IPG has received FDA clearance for its next-generation thulium medical laser systems, with shipments expected to begin in Q4. The company is also making headway in urology applications, with a major milestone announced during the call. As Mark Gitin highlighted, the focus remains on sustaining momentum and balancing operational discipline with investment and innovation.

Gross Margin and Operating Expenses

The company's gross margin performance was driven by improved product gross margin, lower inventory provisions, and better under-absorbed costs. Operating expenses were flat sequentially but above last year's level, primarily due to investments supporting the company's strategy and strengthening its organization. For Q4, IPG expects revenue of $230 million to $260 million and adjusted gross margin between 36% and 39%.

Valuation and Outlook

With a P/E Ratio of 145.51 and an EV/EBITDA of 59.09, the market appears to be pricing in significant growth expectations. Analysts estimate next year's revenue growth at 7.3%. Given the company's strong performance and growth initiatives, it remains to be seen whether IPG Photonics can meet these expectations. The company's ROIC of 0.5% and ROE of 1.24% indicate room for improvement in capital efficiency.

Growth Initiatives and New Developments

IPG is making significant investments in non-industrial areas like medical, micromachining, and defense, with CROSSBOW, a new product, showing strong interest at recent shows. The company expects revenue from CROSSBOW in 2026 and is targeting 2-3x revenue growth in urology over the next 2-3 years. With new customers in medical and new products coming out in Q4, the stage is set for continued growth.

3. NewsRoom

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Brandes Investment Partners LP Raises Holdings in IPG Photonics Corporation $IPGP

Dec -03

Source: defenseworld.net

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IPG Photonics Corporation $IPGP Shares Acquired by Creative Planning

Dec -02

Source: defenseworld.net

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Ensign Peak Advisors Inc Sells 1,100 Shares of IPG Photonics Corporation $IPGP

Dec -01

Source: defenseworld.net

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Investing in IPG (IPGP)? Don't Miss Assessing Its International Revenue Trends

Nov -17

Source: zacks.com

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Envestnet Asset Management Inc. Buys 11,383 Shares of IPG Photonics Corporation $IPGP

Nov -17

Source: defenseworld.net

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IPG Photonics' Q3 Earnings Beat Estimates, Revenues Increase Y/Y

Nov -05

Source: zacks.com

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IPG Photonics Corporation (IPGP) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

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IPG Photonics (IPGP) Surpasses Q3 Earnings and Revenue Estimates

Nov -04

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.15%)

6. Segments

High Power Continuous Wave (CW) Lasers

Expected Growth: 8%

The 8% growth of High Power Continuous Wave (CW) Lasers from IPG Photonics Corporation is driven by increasing demand for material processing, particularly in the automotive and aerospace industries. Additionally, the adoption of CW lasers in medical applications, such as skin treatments and eye surgery, is also contributing to growth. Furthermore, the rising need for high-precision manufacturing and the growing trend of Industry 4.0 are fueling the demand for these lasers.

Other Revenue including Amplifiers, Service, Parts, Accessories and Change in Deferred Revenue

Expected Growth: 5%

The 5% growth in Other Revenue is driven by increasing demand for amplifiers and services, as well as sales of parts and accessories. Additionally, the change in deferred revenue from IPG Photonics Corporation contributes to this growth, indicating a strong market for high-performance laser systems and related components.

Pulsed Lasers

Expected Growth: 9%

IPG Photonics' Pulsed Lasers growth is driven by increasing adoption in industrial manufacturing, particularly in electric vehicle battery welding and 3D printing. Rising demand for high-precision materials processing and growing investments in Industry 4.0 technologies also contribute to the segment's 9% growth.

Laser and Non-Laser Systems

Expected Growth: 6%

IPG Photonics' Laser and Non-Laser Systems growth is driven by increasing adoption in industrial materials processing, rising demand for high-power lasers in metal cutting and welding, and growing use in medical and aerospace applications. Additionally, advancements in fiber laser technology, expanding market share in Asia, and strategic acquisitions contribute to the 6% growth.

Medium Power CW Lasers

Expected Growth: 7%

The 7% growth of Medium Power CW Lasers from IPG Photonics Corporation is driven by increasing demand for precision material processing, rising adoption in automotive and aerospace industries, and growing need for high-precision welding and cutting applications. Additionally, advancements in laser technology and decreasing costs are making these lasers more accessible to a wider range of industries and applications.

Quasi-Continuous Wave (QCW) Lasers

Expected Growth: 8%

IPG Photonics' Quasi-Continuous Wave (QCW) Lasers' 8% growth is driven by increasing adoption in industrial material processing, rising demand for high-precision welding and cutting, and growing use in medical and aesthetic applications. Additionally, advancements in laser technology, expanding market share, and strategic partnerships contribute to the segment's growth.

7. Detailed Products

High-Power Laser Systems

IPG Photonics' high-power laser systems are designed for material processing applications, offering high beam quality, high power, and high reliability.

Pulsed Laser Systems

IPG Photonics' pulsed laser systems provide high peak power and short pulse duration, ideal for applications requiring high precision and minimal heat input.

Quasi-CW Laser Systems

IPG Photonics' quasi-CW laser systems offer high average power and high beam quality, suitable for applications requiring high precision and high throughput.

Single-Mode Fiber Lasers

IPG Photonics' single-mode fiber lasers provide high beam quality, high power, and high reliability, ideal for applications requiring high precision and minimal heat input.

Multi-Mode Fiber Lasers

IPG Photonics' multi-mode fiber lasers offer high power, high reliability, and high efficiency, suitable for applications requiring high throughput and minimal maintenance.

Ultrafast Laser Systems

IPG Photonics' ultrafast laser systems provide high peak power, short pulse duration, and high repetition rate, ideal for applications requiring high precision and minimal heat input.

Laser Systems for Medical Applications

IPG Photonics' laser systems for medical applications provide high precision, high reliability, and high safety, suitable for applications such as ophthalmology, dermatology, and surgery.

8. IPG Photonics Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

IPG Photonics Corporation has a low threat of substitutes due to its unique and patented fiber laser technology, which is difficult to replicate.

Bargaining Power Of Customers

IPG Photonics Corporation's customers have some bargaining power due to the presence of a few large customers, but the company's diversified customer base and high-quality products mitigate this power.

Bargaining Power Of Suppliers

IPG Photonics Corporation has a low bargaining power of suppliers due to its vertical integration and control over its supply chain, reducing dependence on external suppliers.

Threat Of New Entrants

IPG Photonics Corporation has a low threat of new entrants due to the high barriers to entry in the fiber laser industry, including significant capital requirements and technological expertise.

Intensity Of Rivalry

IPG Photonics Corporation operates in a competitive industry, but its strong market position, patented technology, and diversified product portfolio help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.75%
Debt Cost 9.81%
Equity Weight 99.25%
Equity Cost 9.81%
WACC 9.81%
Leverage 0.76%

11. Quality Control: IPG Photonics Corporation passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Lattice Semi

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Growth: 4.0

Quality: 6.6

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IPG Photonics

A-Score: 3.4/10

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Growth: 2.1

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

81.92$

Current Price

81.92$

Potential

-0.00%

Expected Cash-Flows