LECO - IPG Photonics Hit Hard By Ongoing Share Loss And Global Tensions

• IPG Photonics posted disappointing results for Q4'21 with pronounced weakness in its Chinese high-power laser business and guided to a mid-single-digit growth rate and a "reset" for FY'22.
• Competitive inroads from Chinese fiber laser companies have been an issue for some time, and management will have to work to build new high-value growth markets outside of China.
• IPG has stayed at the forefront of fiber laser technology for years, but finding new, large growth markets has proven more challenging and inconsistent.
• Geopolitical turbulence is a credible risk, with IPG having a substantial physical presence (manufacturing, R&D, and management) in Russia.
• Mid-single-digit revenue growth, high single-digit FCF growth, and mid-to-high 20%s operating margins can support a higher share price, but this is a contrarian call.

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