Why IPG Photonics Shares Got Crushed Today

What happened

Shares of IPG Photonics (NASDAQ: IPGP) have gotten crushed today, down by 12% as of noon EDT, after the company announced preliminary fiscal third-quarter earnings results. The company blamed President Trump's trade war for missing its guidance.

So what

IPG expects revenue in the third quarter to be in the range of $355 million to $356 million, below its prior forecast of $360 million to $390 million that was issued on July 31 alongside second-quarter earnings . The fiber laser specialist also took a $5 million hit related to foreign exchange. Earnings per share should be $1.83 to $1.87, much worse than the $1.80 to $2.05 per share in profits it originally expected.

Fiber optic cable

Image source: Getty Images.

CEO Dr. Valentin Gapontsev made it clear that Trump's trade policies were to blame, saying, "These tariff and trade-related headwinds were the primary driver of weaker than expected performance for our business in China and Europe." China is by far IPG's biggest market, representing roughly half of revenue in the second quarter.

Now what

On the last earnings call , CFO Tim Mammen, responding to an analyst question on whether tariffs were impacting the business, addressed the uncertainty that they were creating:

In China, I think there's a lot more uncertainty within the end market, where we're a little bit removed from it. But the tariff talk and the trade war talk, I think, is having a psychological effect on the end markets, and certainly making people less optimistic about the investment decisions they're making. So yes, absolutely, particularly in China.

IPG now expects full-year revenue growth to be below its outlook as well. The company was previously forecasting the top line to grow by 7% to 9%. IPG will release full results on Oct. 30, and update its full-year outlook at that time.

10 stocks we like better than IPG Photonics
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and IPG Photonics wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends IPG Photonics. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Stocks
Referenced Symbols: IPGP

More from Motley Fool


Motley Fool

Motley Fool

Market News, Investing

Research Brokers before you trade

Want to trade FX?