Since the beginning of 2022, the laser industry has been facing several challenges, including supply chain issues and semiconductor shortages exacerbated by the Russia-Ukraine war and extended lockdown measures in China. However, the increasing use of lasers in end-user sectors, including telecommunications, manufacturing, electronics, automotive, industrial, and healthcare, is expected to boost the laser industry’s growth in the coming months. Furthermore, the industry benefits from rising technological investments in different sectors.
According to a report by Market Reports World, the global fiber laser market is expected to reach $9.92 billion by 2027, growing at a 12% CAGR.. The market is driven by the growing demand for high-powered fiber lasers in various applications, increased productivity, and declining demand for carbon dioxide lasers.
Given the industry’s promising growth prospects, Wall Street analysts expect quality laser stocks IPG Photonics Corporation (IPGP) and nLIGHT, Inc. (LASR) to surge in price in the coming months.
IPG Photonics Corporation (IPGP)
IPGP in Oxford, Mass., develops, manufactures, markets, and sells high-performance fiber lasers, fiber amplifiers, and diode lasers worldwide. The company’s wide range of laser products includes hybrid fiber-solid state lasers, high-energy pulsed lasers, multi-wavelength and tunable lasers, and single-polarization and single-frequency lasers. It also provides erbium-doped fiber and Raman amplifiers, integrated communications systems, and thulium specialty fiber amplifiers.
On March 3, IPGP announced a continuation of production at its Russian operations. Its Russian facilities will continue operating and manufacturing optical components and finished products for its operations in the U.S., Germany, and China. Although economic sanctions might increase lead times and shipping costs for lasers and components to and from IPGP’s Russian operations, it is expected to boost its business growth and profitability.
IPGP's net sales increased 7.1% year-over-year to $369.98 million in its fiscal year 2022 first quarter, ended March 31, 2022. Its gross profit improved 4.8% year-over-year to $171.82 million, while its operating income grew 4.8% from its year-ago value to $93.14 million. The company’s net income and net income attributable to IPGP per share were $69.63 million and $1.31, respectively, registering a 2.1% and 4% increase year-over-year.
Analysts expect IPGP's revenue for its fiscal year 2023, ending Dec. 31, 2023, to come in at $1.62 billion, representing a 7.2% rise year-over-year. The company has surpassed the consensus revenue estimates in three of the trailing four quarters. The Street expects the company's EPS for the next year to come in at $5.53, registering a 13.5% increase year-over-year. Furthermore, it has surpassed the consensus EPS estimates in three of the trailing four quarters.
IPGP stock has declined in price over the past month and closed yesterday's trading session at $100.78. However, the 12-month median price target of $162.14 indicates a 60.9% potential upside. The price targets range from a low of $95.00 to a high of $210.00. Among the nine Wall Street analysts that rated IPGP, five rated it Buy, two rated it Hold, while two rated it Sell.
nLIGHT, Inc. (LASR)
LASR in Vancouver, Wash., designs, manufactures, and sells semiconductor and fiber lasers for industrial, microfabrication, and aerospace and defense applications. The company operates through two segments: Laser Products; and Advanced Development. In addition, it provides fiber amplifiers and control systems for use in high-energy laser systems. LASR sells its products through direct sales, independent sales representatives, and distributors in the U.S., China, South Korea, and European countries.
Last February, LASR acquired the assets of Plasmo Industrietechnik GmbH, an Austrian-based provider of automated quality assurance and diagnostic solutions for welding and manufacturing markets. The acquisition of Plasmo assets might strengthen its position as a critical enabler of manufacturing in the growth markets, expand its laser portfolio, and add additional scale in Europe.
For its fiscal 2022 first quarter, ended March 31, 2022, LASR’s total revenue increased 5.1% year-over-year to $64.46 million, and its revenue from the Laser Products segment improved 7.9% year-over-year to $51.06 million. The company’s gross profit amounted to 16.18 million for the first quarter. In addition, its net other income rose 11.5% from its year-ago value to $29,000.
The $41.91 billion consensus revenue estimate for its fiscal 2022 represents an increase of 31.2% from the last year. The Street expects the company's EPS for its fiscal year 2023 to rise 14.9% year-over-year. It is no surprise that LASR has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has declined 22% in price over the past month and 54.1% over the past six months. It closed yesterday's trading session at $12.49.
Among the seven Wall Street analysts that rated LASR, four rated it Buy, while three rated it Hold. The 12-month median price target of $25.50 indicates a 104.2% potential upside. The price targets range from a low of $14.00 to a high of $40.00.
IPGP shares were trading at $96.56 per share on Tuesday afternoon, down $4.22 (-4.19%). Year-to-date, IPGP has declined -43.91%, versus a -16.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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