Why Is IPG (IPGP) Down 7.1% Since Last Earnings Report?

Core Viewpoint - IPG Photonics reported a positive Q3 earnings performance, with adjusted earnings and revenues exceeding estimates, but the stock has seen a decline of approximately 7.1% since the last earnings report, underperforming the S&P 500 [1][2][3]. Financial Performance - Q3 2025 adjusted earnings were 35 cents per share, beating the Zacks Consensus Estimate by 19 cents and increasing by 9% year-over-year [3]. - Revenues reached $250.8 million, an 8% year-over-year increase, surpassing the consensus mark by 6.59% [3]. - The book-to-bill ratio was approximately one in the reported quarter [3]. Revenue Breakdown - The year-over-year revenue growth was driven by higher sales in materials processing, medical, and advanced applications [4]. - Sales from materials processing, which accounted for 88% of total revenues, increased by 6% year-over-year to $212.3 million, supported by strong demand in welding and additive manufacturing [5]. - Revenues from other applications rose by 20% year-over-year, primarily due to increased sales in medical and advanced applications [6]. Geographic Performance - Sales in Europe declined by 7%, while North America and Asia saw increases of 8% and 15% year-over-year, respectively [6]. Profitability Metrics - The adjusted gross margin was 39.8%, up 360 basis points year-over-year [6]. - Adjusted EBITDA increased by 33% year-over-year to $37 million [6]. Balance Sheet and Cash Flow - As of September 30, 2025, IPG Photonics had $900.6 million in cash and cash equivalents, short-term investments, and long-term investments [7]. - The company spent $21 million on capital expenditures and $16 million on share repurchases during the third quarter [7]. Guidance - For Q4 2025, IPG Photonics anticipates sales between $230 million and $260 million, with an expected adjusted gross margin of 36% to 39% [8]. - Operating expenses are projected to be between $90 million and $92 million, with adjusted EBITDA expected to range from $21 million to $38 million [8]. - Earnings for Q4 2025 are forecasted to be between 5 cents and 35 cents per share [8]. Estimate Revisions - There has been a downward trend in estimates, with the consensus estimate shifting down by 25.39% in the past month [10]. - The stock currently holds a Zacks Rank 3 (Hold), indicating an expectation of an in-line return in the coming months [12]. VGM Scores - IPG Photonics has a poor Growth Score of F, a Momentum Score of D, and a Value Score of F, placing it in the fifth quintile for investment strategy [11].