A lot of what I was worried about concerning IPG Photonics (NASDAQ:IPGP) back in December has come to pass in 2016, as the company has seen weaker manufacturing activity and greater competition in China squeeze the company's once-robust growth rates. The market has reacted pretty predictably too, tossing the stock around between the mid-$70s and $103 as investors try to weigh out the opportunities that double-digit underlying market growth and new product introductions offer against the specter of rising competition and a prolonged slowdown in major end markets.
I certainly can't promise that the third quarter won't bring another downward revision to guidance or that the stock won't see the $70s again. That said, I think IPG Photonics is well placed to maintain its leadership in fiber lasers and expand its addressable market opportunities. Low double-digit free cash flow growth is hardly a conservative projection in my book, but I think IPG Photonics can hit that mark and support a fair value in the mid-$90s.
Read the full article here:
A Metalworking Slowdown Creates An Opportunity With IPG Photonics