IPG's Investor Conference Unveils Expansion Strategies in Battery Welding, Medical, and Emerging Laser Markets: Analyst

Benchmark analyst Mark Miller reiterated IPG Photonics Corp IPGP with a Buy and a $134 price target.

An investor conference hosted by Miller provided insights into IPG's key business segments and growth prospects.

IPG has seen significant growth in battery welding applications, such as foil cutting and electrode cleaning, which now constitute over 20% of its sales, with the expectation that the EV battery market will expand from 1TW to 6TW by 2030.

IPG holds a three-year lead in battery welding applications, particularly in high-energy and weld monitoring segments. About 80% of its battery welding sales originate from China, while other regions like North America, Europe, and Korea show healthy demand.

LightWELD, a handheld welding system, continues to perform well and is being expanded into Europe. IPG estimates a $1 billion Total Addressable Market (TAM) for handheld welding systems and a $200 million opportunity for LightWELD.

IPG sees significant potential in the medical sector, including kidney stone removal, where it's penetrated about 10% of the market. Other medical applications like skin tightening, rejuvenation, and ophthalmic procedures are opportunities.

Cleaning applications using lasers to replace chemical processes are another growing avenue for IPG, representing less than 5% of its sales.

IPG is exploring emerging growth opportunities such as green lasers for renewable energy, AMB lasers for e-Mobility, and additive processes for smartphone cases.

The company is shifting production from Russia to Italy and a new plant in Poland, which has temporarily impacted margins.

IPG is seeking complementary acquisitions in emerging growth areas like Laser Dynamics, with a target acquisition size of a few hundred million U.S. dollars.

IPG aims to focus its Genesis business more on lasers.

Miller estimates revenue of $1.324 billion in FY23 and $1.465 billion in FY24. He projects revenue of $317 million in Q3 and $320 million in Q4.

Price Action: IPGP shares traded lower by 1.83% at $102.16 on the last check Monday.

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