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IPG Photonics (IPGP) to Post Q1 Earnings: What's in Store?

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IPG Photonics Corporation (IPGP - Free Report) is slated to report first-quarter 2020 results on May 5.

For the first quarter, IPG Photonics expects sales in the range of $220-$250 million. The Zacks Consensus Estimate for revenues is currently pegged at $233.82 million, indicating a decline of 25.8% from the year-ago quarter.

Management projected earnings between break-even to 30 cents per share. The Zacks Consensus Estimate for earnings stands at 16 cents per share, suggesting a decline of 84.3% from the year-ago reported figure. Notably, the estimates declined 20% in the past 30 days.

Notably, the company beat the Zacks Consensus Estimate in two of the trailing four quarters, while missing the same twice. The company has a trailing four-quarter positive earnings surprise of 1.56%, on average.
 

IPG Photonics Corporation Price and EPS Surprise

IPG Photonics Corporation Price and EPS Surprise

IPG Photonics Corporation price-eps-surprise | IPG Photonics Corporation Quote

Factors to Note

Soft demand for high-power CW lasers across China and Europe owing to macroeconomic headwinds led by coronavirus crisis, is likely to have affected IPG Photonics’ first-quarter performance.

Particularly, weak demand across additive manufacturing applications has been leading to decline in average prices, which might have weighed on profitability in the first quarter.

Further, coronavirus crisis-led sluggish demand for industrial automation equipment may have negatively impacted the performance in the quarter to be reported.

Nevertheless, IPG Photonics’ efforts to expand into new end-markets like advanced applications (3D Printing, Cinema, and micro-materials processing), communications and medical are likely to get reflected in the first-quarter results.

In fact, development of new medical applications utilizing fiber lasers for urological and dental procedures is likely to have aided adoption of laser-based medical solutions. This, in turn, might have contributed to the first-quarter performance.

During the quarter to be reported, the company unveiled support for bi-directional, single fiber transmission modules to simplify optical networking. Incremental adoption of the latest modules amid the increasing need of enhancing networking infrastructure in the cake of coronavirus-led spike in Internet use is likely to get reflected in the first-quarter results.

In the fourth quarter, IPG Photonics had witnessed strong growth in medical laser business. Notably, the company received Food and Drug Administration (or FDA) approval for its thulium fiber lasers solution that are utilized in urologic applications. The momentum is likely to have continued in the first quarter driven by the FDA approval. Further, the company is banking on “significant large order” booked in January, which is expected to strengthen the company’s position in the medical laser market.

Moreover, synergies from acquisition of Genesis are likely to get reflected in IPG Photonics’ first-quarter results. Genesis' robotic systems integration capabilities are expected to have benefited the company in extending laser processing offerings to industrial, aerospace and transportation end markets. Notably, Genesis contributed $19 million to total revenues in the fourth quarter.

Additionally, continued momentum in orders for 6 kilowatt and 10 kilowatt single-mode lasers, and high-power CW lasers are anticipated to get reflected in the first-quarter results.

However, expenses pertaining to reduce costs to deal with coronavirus crisis-hit macroeconomic scenario are likely to have limited margin expansion in the first quarter.

What Our Model Says

According to the Zacks model, a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

IPG Photonics has an Earnings ESP of -1.24% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a couple of stocks that you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Shopify Inc. (SHOP - Free Report) has an Earnings ESP of +5.44% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Inphi Corporation (IPHI - Free Report) has an Earnings ESP of +20.04% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Universal Display Corporation (OLED - Free Report) has an Earnings ESP of +15.90% and a Zacks Rank #3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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