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IPG Enhances Welding Solutions With Laser Depth Dynamics

Zacks Equity Research

IPG Photonics Corp. IPGP, a manufacturer and developer of high performance fiber lasers, recently announced the acquisition of Laser Depth Dynamics (LDD)  to optimize the usage of lasers in the manufacturing industry.

LDD primarily monitors and controls solutions related to laser-based welding processes. The company’s flagship inline coherent imaging (ICI) technology allows real-time direct measurement of the depth of weld penetration, thereby making the process accurate and cost effective compared to the indirect techniques.

Management believes that this unique feature of LDD when integrated with IPG’s own welding solutions portfolio will boost the adoption rate of the solutions across multiple industries that require automated production facilities. The accelerated usage of these solutions will eventually boost IPG’s top line.

Shares of IPG have gained 103.5% on a year-to-date basis, outperforming the 79.7% increase of the industry it belongs to.


Robust Sales Growth

Notably, IPG posted strong sales figures in third-quarter 2017 results, which surged 47.6% from the year-ago quarter to $392.6 million. The figure outperformed the guided range of $350-$370 million.

Materials processing sales jumped 52.1% year over year and accounted for approximately 95.4% of total sales driven by strength in cutting and welding applications. Record laser sales for 3D printing applications also aided growth.

Geographically, China, Europe, Turkey and Korea were the highest revenue contributors, driven by massive demand for high-power CW lasers for cutting and welding applications, medium-power lasers for 3D printing applications, pulsed laser sales for marking and engraving as well as high-power pulsed lasers for marking, engraving, and solar cell manufacturing.

Will the Momentum Continue?

We believe strong adoption of fiber lasers over conventional lasers and non-laser cutting and welding equipment is proving to be a key catalyst for IPG. According to management, higher productivity and lower operating cost of fiber lasers are accelerating the replacement of installed base of CO2 and YAG laser systems, hence driving the company’s top line.

Moreover, with a proper blend of improved manufacturing efficiency, cost reductions, favorable product mix coupled with customer credit management and global administration, IPG is poised to enjoy steady growth going ahead.

IPG Photonics Corporation Revenue (TTM)

IPG Photonics Corporation Revenue (TTM) | IPG Photonics Corporation Quote

Zacks Rank and Other Stocks to Consider

IPG sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the broader technology sector include NVIDIA NVDA, Intel INTC and Lam Research Corporation LRCX. All three stocks carry a Zacks Rank #1.

Long-term earnings growth rate for NVIDIA, Intel and Lam Research is currently projected to be 11.20%, 8.42% and 14.85%, respectively.

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