IPG Photonics rises as Citi upgrades following 'strong' Q1 results

May 04, 2022 9:06 AM ETIPG Photonics Corporation (IPGP)By: Chris Ciaccia, SA News Editor

IPG Photonics (NASDAQ:IPGP) shares rose on Wednesday after investment firm Citi upgraded the semiconductor company following its "strong" first-quarter results, noting that its declining exposure to China may be a benefit.

Analyst Jamie Wong upgraded IPG Photonics (IPGP) shares to buy from neutral, writing that the company is likely to face "fewer business uncertainties" than its peers in China in the first-half of 2022 as a result of the Covid-related lockdowns the country is undergoing.

"Although China revenue was down 7% [year-over-year], IPGP still managed to register 7% [year-over-year] growth in [first-quarter] thanks to its strategy to diversify its geographic exposure and applications," Wong wrote in a note to clients.

IPG Photonics (IPGP) shares rose more than 3% to $110.25 in premarket trading on Wednesday.

In addition, Wong noted that IPG Photonics (IPGP) strong results came from higher sales in welding, related to electric vehicles and manufacturing, as well as medical and "other emerging applications," all of which offset lowered demand for cutting.

On Tuesday, IPG Photonics (IPGP) said it earned $1.31 per share on $370 million in revenue during the first-quarter, compared to estimates of 97 cents per share and $334.48 million in sales.

Looking ahead, the company said it expects second-quarter revenue to be between $355 million and $385 million, compared to estimates of $361.36 million.

In March, Raymond James downgraded IPG Photonics (IPGP) shares, citing Russia's invasion of Ukraine, new COVID-19 related concerns and an increase in costs.

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