According to CLSA, "System sales are taking off, business trends in China remain robust, and new products including UV and ultrafast lasers are set to hit the market." The comments follow CLSA's meeting with IPG Photonics Chief Financial Officer Tim Mammen.
A weak machine tool market and "very tough comps" put FY16 guidance at risk, according to CLSA. However, the company still appears on track to deliver on its sales growth target, as the company's fiber lasers continue to rapidly replace conventional technologies "in a widening range of metal processing applications."
IPG Photonics has built up a $700 million cash reserve and recently launched a share buyback program worth $100 million by June 2018.
"While we see valuation upside, we think it is unlikely to be realized until fears around China recede and growth returns to double-digits," said CLSA.
CLSA has an Outperform rating on IPG with a $92 price target.
IPG Photonics Corporation traded flat at time of writing.
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