At US$72.72, Is IPG Photonics Corporation (NASDAQ:IPGP) Worth Looking At Closely?

IPG Photonics Corporation (NASDAQ:IPGP), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$85.75 at one point, and dropping to the lows of US$70.41. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether IPG Photonics' current trading price of US$72.72 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at IPG Photonics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for IPG Photonics

What's The Opportunity In IPG Photonics?

According to our valuation model, IPG Photonics seems to be fairly priced at around 16% below our intrinsic value, which means if you buy IPG Photonics today, you’d be paying a fair price for it. And if you believe the company’s true value is $86.65, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, IPG Photonics’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from IPG Photonics?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With revenues expected to grow by a double-digit 21% over the next couple of years, the outlook is positive for IPG Photonics. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? IPGP’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on IPGP, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in IPG Photonics, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.