IPG Photonics ( Nasdaq - IPGP ) -- Postive Book-to-Bill Ratio

IPG Photonics (IPGP $55.00) reported excellent on target Q4 results.  Non-GAAP earnings (excluding double counted stock expense) advanced 20% to $.67 a share.  Sales rose 22% to $123.5 million.  Orders exceed shipments, propelling backlog to $207 million.  For the entire year income climbed 112% to $2.52 a share.  Sales improved 59% to $474.5 million.  The company's performance was consistent with our estimates. 

New products are in development.  Manufacturing costs continue to be reduced.  Competitive inroads remain vague.  And the potential market continues to expand as fiber optic lasers displace legacy technologies.  The systems also are starting to replace other technologies.  Entirely new applications are in the works, as well, such as oil and gas drilling. 

Financial performance likely will be constrained by economic headwinds in the coming year.  Still, the combination of market share gains and the development of new markets promises to keep results moving higher at above average rates.  We estimate sales will increase 16% to $550 million to provide earnings of $2.95 a share +17%).  Long term growth of 20%-30% appears sustainable well into the decade because IPG Photonics holds a substantial technology advantage, and fiber optic lasers promise to become the dominant laser methodology.

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