What Happened?

Shares of fiber laser manufacturer IPG Photonics (NASDAQ:IPGP) jumped 11.3% in the afternoon session after the company reported third-quarter earnings that revealed strong improvement in inventory levels. In addition, its revenue and adjusted EPS outperformed Wall Street's estimates. We note its GAAP EPS and EBITDA fell short of Wall Street's estimates due to a divestiture. Overall, this was a solid quarter.

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What The Market Is Telling Us

IPG Photonics’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. Moves this big are rare for IPG Photonics and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 9 months ago when the stock dropped 14.2% on the news that the company reported fourth-quarter results and provided revenue guidance for the next quarter that fell below Wall Street's expectations. In addition, EPS missed. 

On the other hand, revenue exceeded expectations during the quarter, driven by higher sales in welding, cleaning, 3D printing, and medical applications. However, the topline growth was offset by "continued soft industrial demand across many major geographies and lower sales in e-mobility applications in China." Overall, this was a challenging quarter, with the outlook likely weighing on shares.

IPG Photonics is down 19% since the beginning of the year, and at $86.35 per share, it is trading 21.9% below its 52-week high of $110.56 from December 2023. Investors who bought $1,000 worth of IPG Photonics’s shares 5 years ago would now be looking at an investment worth $693.86.

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