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IPG Photonics Corporation (IPGP)
NASDAQ:IPGP
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IPG Photonics
(NASDAQ:IPGP)
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Rating:61Neutral
Price Target:
$159.00
▲(3.31% Upside)
The score is anchored by strong financial resilience (debt-free balance sheet) and constructive earnings-call momentum (book-to-bill >1 and improving growth mix). Offsetting these are weak recent cash flow/free cash flow, extremely overbought technicals that elevate pullback risk, and a very high P/E that leaves little margin for execution missteps.
Positive Factors
Debt-free balance sheet & cash reserves
A virtually debt-free capital structure and large cash/investment position provide durable financial flexibility. This supports multi-year R&D, increased 2026 CapEx, buybacks, and cushioned operations through cyclical demand swings, reducing refinancing and solvency risk.
Diversifying revenue mix into medical & emerging
A growing contribution from medical, micromachining and other emerging applications reduces dependence on cyclical materials-processing end markets. Higher-margin medical products and recurring consumables can lift sustainable gross margins and create more predictable revenue streams over time.
Technology leadership and new product programs
New product launches, defense-focused business formation and an R&D/manufacturing footprint in Huntsville signal entry into structurally attractive markets. Demonstrated tech differentiation supports premium positioning, long-term contract opportunities, and a pathway to adjacent, higher-value revenue streams.
Negative Factors
Weakened 2025 cash generation
Deterioration to slightly negative free cash flow in 2025 reduces internal funding for growth investments and increases reliance on cash reserves. If cash conversion volatility persists, management may face trade-offs between capex, R&D, buybacks and working-capital needs over the medium term.
Tariff and cost-absorption margin pressure
Persistent tariff headwinds and under-absorbed fixed costs structurally compress gross margins unless offset by pricing, sourcing changes, or scale. This limits sustainable margin expansion toward the company's >40% gross-margin target and raises execution risk on margin recovery plans.
Higher near-term CapEx and order-timing risk
Elevated and backloaded capital spending increases near-term cash deployment and execution complexity. Coupled with timing of system shipments, this creates revenue cadence volatility and execution risk: delayed capacity or slower delivery could postpone payback on investments and pressure near-term returns.
IPG Photonics (IPGP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.48B
Dividend YieldN/A
Average Volume (3M)435.88K
Price to Earnings (P/E)211.0
Beta (1Y)1.29
Revenue Growth-7.49%
EPS GrowthN/A
CountryUS
Employees4,740
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)0.31
Shares Outstanding42,124,480
10 Day Avg. Volume667,385
30 Day Avg. Volume435,883
Financial Highlights & Ratios
PEG Ratio-0.83
Price to Book (P/B)1.43
Price to Sales (P/S)3.04
P/FCF Ratio-883.02
Enterprise Value/Market Cap0.94
Enterprise Value/Revenue6.06
Enterprise Value/Gross Profit15.94
Enterprise Value/Ebitda63.47
Forecast
1Y Price Target
$152.25Price Target Upside-1.08% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
IPG Photonics Business Overview & Revenue Model
Company DescriptionIPG 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.
How the Company Makes MoneyIPG Photonics generates revenue primarily through the sale of its fiber laser systems and related products. The company has a diversified revenue model that includes the sale of laser systems, which constitute the largest portion of its sales, along with related services such as installation, maintenance, and repairs. Additionally, IPG offers components like laser diodes and amplifiers, which serve as significant revenue streams. The company benefits from strong demand across various sectors, including industrial manufacturing, automotive, aerospace, and medical devices. Key partnerships with manufacturers and distributors enhance its market reach. Furthermore, the growth in automation and technological advancements in laser applications contribute to its earnings, as industries increasingly adopt laser technology for efficiency and precision.
IPG Photonics Key Performance Indicators (KPIs)
IPG Photonics Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call conveyed a predominantly positive tone: management reported a strong Q4 beat, the company's first full-year revenue growth since 2021, growing contribution from higher-margin and emerging markets (medical, micromachining, advanced applications), solid cash and no debt, and product/technology milestones (awards, BUV demo, Crossbow launch). Headwinds were acknowledged—tariff-related margin pressure, under-absorption from inventory decisions, higher product costs, and some timing-related order shipping into future quarters—along with increased 2026 CapEx. Overall, the positive operational momentum, diversified growth drivers, robust balance sheet, and book-to-bill >1 outweigh the margin and timing challenges, but management remains cautiously optimistic.Q4-2025 Updates
Positive Updates
Strong Q4 Revenue Beat
Revenue of $274 million in Q4 2025, +17% year-over-year and +9% sequentially; foreign currency added ~$6 million (≈2%) in the quarter.
First Full-Year Revenue Growth Since 2021
Full-year 2025 revenue grew 3%, marking the company's first annual revenue increase since 2021.
Emerging Growth Mix Expanding
Products outside traditional materials processing represented ~14% of total revenue for 2025; emerging growth products accounted for 54% of total sales in Q4 (up from 52% prior quarter, matching a record).
Medical Business Momentum
Medical sales grew 21% in 2025 to a record level; received FDA clearance for next-generation urology system (StoneSense) and began shipments in Q4; management expects further product launches and potential to expand recurring consumable revenue.
Materials Processing & Welding Strength
Materials processing revenue in Q4 +17% YoY and +6% sequentially; welding showed region-specific strength with increased sales in Asia/China driven by rebounding battery investments and a shift toward stationary storage use cases.
Regional Order Strength
North America sales +23% YoY and +21% sequentially; Asia sales +19% YoY and +5% sequentially; Europe improved +7% YoY and +8% sequentially with notable Clean Laser synergies.
Profitability, Cash Position, and Capital Returns
Adjusted EBITDA of $41 million in Q4 (above guidance), GAAP net income $13 million ($0.31/diluted), adjusted net income $20 million ($0.46/diluted). Strong balance sheet with $839 million cash/cash equivalents/short-term investments, $77 million long-term investments, no debt, positive free cash flow in Q4, $53 million of share repurchases in 2025 and a new $100 million buyback authorization.
Product and Technology Recognition
Received a Prism Award for a new 8 kW single-mode laser; demonstrated a compact 148 nm vacuum ultraviolet BUV laser source—significant technological milestones supporting differentiated roadmap.
Directed Energy Progress
Launched Crossbow (3 kW 'Mini') scalable laser-defense system for group 1/2 drones, formed IPG Defense, and opened an R&D/manufacturing facility in Huntsville, indicating early commercial traction and a roadmap to higher-power variants.
Negative Updates
Gross Margin Pressure from Tariffs and Cost Absorption
GAAP gross margin was 36.1% and adjusted gross margin 37.6% in Q4; tariffs reduced gross margin by ~200 basis points year-over-year (50 bps worse than expected) and under-absorption of fixed costs (planned inventory management) further depressed margins versus revenue level.
Operating Income and One-Time Costs
GAAP operating income was modest at $3 million in Q4; results included approximately $4 million of one-time costs and year-over-year operating expense increases due to strategic investments.
Product Costs and Tariff Persistence
Higher product costs contributed to gross margin decline; management expects tariff headwinds to persist into 2026 (guidance assumes ~150 bps tariff impact in Q1) requiring pricing and cost actions to offset.
Segment & Timing Headwinds
Full-year materials processing sales were flat as lower cutting sales were offset by growth in cleaning/additive/welding; cutting revenue slightly lower YoY and micromachining was impacted by timing of customer orders—some bookings (medical/systems) scheduled to ship beyond Q1, creating near-term revenue timing risk.
CapEx Timing and Increased 2026 Spend
Major fiber manufacturing facility spend was delayed (~$50 million moved into 2026); expected CapEx for 2026 increased to $90–$100 million, introducing timing variability and higher near-term capital deployment.
Europe Recovery Still Lagging
Although Europe improved sequentially (+8% Q4), management characterized it as weaker relative to North America and Asia and still behind in recovery per PMI and order trends.
Company Guidance
The company guided for Q1 2026 revenue of $235 million to $265 million with adjusted gross margin of 37%–39% (including an estimated tariff headwind of ~150 basis points), operating expenses of $90 million–$92 million, adjusted EBITDA of $25 million–$40 million, and adjusted EPS of $0.10–$0.40 on ~42.5 million diluted shares; management noted book‑to‑bill was firmly above one (though some medical/systems bookings will ship after Q1), expects tariffs to persist at a moderated level, anticipates operating expenses to increase modestly through the year to accelerate growth initiatives, and reaffirmed 2026 CapEx of $90 million–$100 million (with underlying CapEx ≈5% of revenue) while highlighting margin upside as revenue growth improves fixed‑cost absorption toward the company’s >40% gross‑margin target.IPG Photonics Financial Statement Overview
Summary
Mixed fundamentals: a very strong, debt-free balance sheet (88) provides resilience, but earnings are only in early recovery (income statement 54) and 2025 cash generation weakened with slightly negative free cash flow (cash flow 46).Income Statement
Profitability rebounded in 2025 (annual) to a modest net profit after a significant loss in 2024, but earnings quality remains weaker than the company’s earlier peak years (2020–2023) when operating and net margins were substantially higher. Revenue growth turned positive in 2025 following declines in 2022–2024, yet the multi-year trend still reflects a smaller revenue base versus 2021–2022 and meaningfully lower operating leverage. Overall, the income statement shows recovery, but not yet a return to historical strength.54
Neutral
Balance Sheet
The balance sheet is a clear strength: the company carries essentially no debt (debt-to-equity near zero and total debt at $0 in 2025), supported by a large equity base relative to total assets. While returns on equity weakened sharply in 2024 and remain low in 2025 due to depressed profitability, financial risk from leverage is minimal and the capital structure provides flexibility to endure cyclical pressure and fund investment.88
Very Positive
Cash Flow
Cash generation became less supportive in 2025 (annual): operating cash flow fell materially versus 2024 and free cash flow turned slightly negative, signaling weaker cash conversion despite returning to positive net income. Prior years (2020–2023) showed consistently positive free cash flow, but the latest year’s deterioration and negative free cash flow growth indicate higher volatility and reduced internal funding capacity in the near term.46
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.00B | 977.13M | 1.29B | 1.43B | 1.46B |
| Gross Profit | 381.46M | 338.15M | 541.70M | 555.41M | 696.40M |
| EBITDA | 89.91M | 75.92M | 301.19M | 321.97M | 449.09M |
| Net Income | 31.10M | -181.53M | 218.88M | 109.91M | 278.42M |
Balance Sheet | |||||
| Total Assets | 2.42B | 2.29B | 2.70B | 2.74B | 3.17B |
| Cash, Cash Equivalents and Short-Term Investments | 839.33M | 930.19M | 1.18B | 1.18B | 1.51B |
| Total Debt | 0.00 | 17.96M | 18.26M | 38.05M | 58.13M |
| Total Liabilities | 296.15M | 264.79M | 283.51M | 357.92M | 423.32M |
| Stockholders Equity | 2.13B | 2.02B | 2.42B | 2.39B | 2.75B |
Cash Flow | |||||
| Free Cash Flow | -3.45M | 149.37M | 185.50M | 102.51M | 266.59M |
| Operating Cash Flow | 75.34M | 247.90M | 295.99M | 212.65M | 389.70M |
| Investing Cash Flow | -265.23M | 208.73M | -237.55M | 296.95M | -416.28M |
| Financing Cash Flow | -54.19M | -339.62M | -236.38M | -514.55M | -125.07M |
IPG Photonics Technical Analysis
Positive
153.91
Price Trends
86.81
Positive
84.86
Positive
78.83
Positive
Market Momentum
14.05
Negative
94.20
Negative
91.17
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IPGP, the sentiment is Positive. The current price of 153.91 is above the 20-day moving average (MA) of 100.72, above the 50-day MA of 86.81, and above the 200-day MA of 78.83, indicating a bullish trend. The MACD of 14.05 indicates Negative momentum. The RSI at 94.20 is Negative, neither overbought nor oversold. The STOCH value of 91.17 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IPGP.
IPG Photonics Risk Analysis
IPG Photonics disclosed 34 risk factors in its most recent earnings report. IPG Photonics reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
IPG Photonics Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $13.54B | 55.58 | 23.08% | ― | 39.37% | 40.87% | |
74 Outperform | $2.29B | 16.95 | 11.89% | ― | -2.04% | 8.84% | |
69 Neutral | $8.06B | 286.37 | 13.39% | ― | 20.60% | ― | |
66 Neutral | $5.94B | 26.88 | 13.30% | 1.52% | -0.58% | -6.67% | |
63 Neutral | $49.41B | 38.93 | 12.53% | 2.29% | 8.01% | 10.41% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $6.48B | 210.95 | 1.50% | ― | -7.49% | ― |
* Technology Sector Average
IPGP
IPG Photonics
153.91
89.93
140.56%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.