IPG Photonics -9.7% premarket; investments pressure EPS


Discussing its Q3 EPS (flat Y/Y and $0.03 below consensus), IPG Photonics (IPGP) says the figure "reflects the peak of [its] current investment cycle expanding manufacturing capacity, R&D and sales and marketing."

Those investments are set to affect Q4 results as well: The industrial laser vendor is guiding for Q4 revenue of $155M-$170M and EPS of $0.68-$0.82 vs. a consensus of $163.6M and $0.80. Demand is expected to be "seasonally weaker in certain areas."

Also hurting EPS: gross margin came in at 53.9%, +40 bps Q/Q but -110 bps Y/Y. R&D spend jumped 48% Y/Y to $11.5M, sales/marketing rose 17% to $6.8M; both growth rates exceeded revenue growth of 10%.

Asian sales rose 40% Y/Y thanks to strong Chinese/Turkish demand, but North American and European sales fell. IPG's core materials processing business saw 19% Y/Y sales growth, down from 26% in Q2 and 29% in Q1.

No mention in the PR of book-to-bill; in the Q2 report, IPG announced B2B "substantially exceeded 1."

COHR -1% in sympathy

Q3 results, PR

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