Buy Signal on IPG Photonics Corporation (IPGP-US)
IPGP is a $9.7 Bn market cap, and specializes in the design and manufacture of high performance fiber lasers, fiber amplifiers and diode lasers. Revenues are split between treatment of materials (94% of sales) and other (6%) including scientific and advanced applications, communications, biotechnology, medicine, etc. The revenue is derived respectively from North America (14%), Asia and Australia (58%) and Europe (28%).
The company enjoys strong margins (EBIT margin expected at 19% in 2020 and 28% in 2022) and cash-flow generation. The Q2-2020 was better than expected due to recovering demand in China, but competition is set to intensify in China in the coming quarters (main competitor Raycus). Expanding penetration of fiber laser and new application should fuel revenue growth later on. 2020 revenue is expected to drop by 10% and to fully recover in 2021.
Short term catalyst: Recovering demand in China, new applications.
This signal looks mainly company specific.