IPG Photonics (IPGP): Valuation Insights Following Robust EV Welding Growth and New Defense Facility Launch

IPG Photonics (IPGP) delivered strong third-quarter results, supported by increased demand in welding applications for electric vehicle and battery production in Asia. The company also launched a new defense-focused facility in Huntsville, Alabama.

See our latest analysis for IPG Photonics.

Despite IPG Photonics’ recent upbeat news on growth in Asian EV welding demand and a new push into defense tech, the stock’s momentum has faded since summer, with a 1-year total shareholder return of 1.6% and longer-term returns still deep in negative territory. The latest share price bounce reflects growing interest in the company’s efforts to reverse years of revenue and earnings declines, but investors remain cautious as structural challenges persist in the background.

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With the recent rebound in performance combined with a history of persistent declines, the real question for investors is whether IPG Photonics is trading at a discount to its long-term potential or if the market is already pricing in a turnaround.

Most Popular Narrative: 16.5% Undervalued

With the latest analyst consensus setting IPG Photonics’ fair value at $94, the current closing price of $78.51 suggests clear potential upside. The narrative behind this valuation combines recent business momentum, the company’s opportunity in new markets, and selective caution around future execution.

“New growth initiatives in medical (e.g., thulium lasers for urology), semiconductor, and micromachining end-markets are gaining early traction, diversifying revenue streams and supporting higher margins over time as these higher-value verticals scale. Recent product innovations like the CROSSBOW directed energy system, validated with multiple unit deliveries and key partnerships (e.g., Lockheed Martin), open up opportunities in defense and critical infrastructure, supporting both revenue acceleration and improved operating leverage.”

Read the complete narrative.

Curious what big, bold assumptions drive this optimism? The blueprint for IPG Photonics’ valuation goes far beyond surface trends. Find out exactly which future profit milestones and ambitious growth bets underpin this target—some numbers may surprise you.

Result: Fair Value of $94 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing tariff pressures and competitive threats in key markets could quickly disrupt revenue growth and challenge IPG Photonics’ path to recovery.

Find out about the key risks to this IPG Photonics narrative.

Another View: Price-to-Earnings Signals Caution

Looking from a market multiples perspective, IPG Photonics trades at a price-to-earnings ratio of 129x, which is significantly higher than the US Electronic industry average of 24.6x and the peer group average of 34.9x. Even compared to its fair ratio of 38.6x, IPG’s valuation looks stretched. This suggests that investors are paying a big premium for future growth. Does this risk justify the potential reward, or is the market getting ahead of itself?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own IPG Photonics Narrative

If you see a different story in the numbers or want to take your own path through IPG Photonics’ data, it’s easy to dig in and craft your own take in just a few minutes. Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding IPG Photonics.

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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.

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