With Wall Street conferences and industry trade shows kicking off in full spring and summer mode, investors are lucky to get the benefit of hearing about trends, products and new innovations that analysts see at these soirees. The applied technologies analysts at Stifel attended the Laser World of Photonics trade show in Shanghai, China, and came away with interesting insight on four stocks they have rated at Buy.
With every company under the sun involved in the photonics and related industries presenting at the conference, optical technologies for the future are at the forefront. The Stifel report focused four top stocks to buy: Coherent Inc. (NASDAQ: COHR), JDS Uniphase Corp. (NASDAQ: JDSU), IPG Photonics Corp. (NASDAQ: IPGP) and Newport Corp. (NASDAQ: NEWP).
Coherent provides photonics-based solutions for a range of commercial and scientific research applications in the United States and internationally. The company operates through two segments: Specialty Lasers and Systems, and Commercial Lasers and Components. It designs, manufactures, services and markets lasers, laser tools, precision optics and related accessories. The company’s products are used in microelectronics, scientific research and government programs, original equipment manufacturer components and instrumentation, and materials processing markets.
The Stifel analysts see demand in China strong for the company. They also see several catalysts on the horizon that can drive revenue in the second half of 2015. They view Coherent’s fiber laser offering as literally acting as a call option on the stock.
The Stifel price target for the stock is posted at $78. The Thomson/First Call consensus price objective is $75.75. The stock closed Thursday at $65.93 a share.
JDS Uniphase was a pioneer of the optical revolution that began in the 1990s and announced last year a plan to split into two separate companies. One will be an optical and laser company, while the second will be a network and service enablement company. The Stifel analysts have felt that this is a very positive catalyst for shareholders. In addition, company management remains very confident about the prospects of the business as the need for bandwidth across the world increases. As a result, the company is seeing strong demand in the Americas for its 100G products and LTE solutions.
The Stifel analysts noted in the recent report that the discussions with the company were centered on the growth potential of its fiber laser offering, which generated an annualized $60 million in revenue in the most recent quarter. The newest generation of offerings has 2, 4 and 6 kilowatts of output power.
The Stifel price target is $16, and the consensus target is $14.55. The stock closed Thursday at $13.83 a share.
IPG Photonics develops and manufactures a range of high-performance fiber lasers, fiber amplifiers and diode lasers used in various applications, primarily in materials processing worldwide. The company’s laser products include low, medium and high output power lasers; fiber pigtailed packaged diodes and fiber coupled direct diode laser systems; high-energy pulsed lasers, multi-wavelength and tunable lasers, and single-polarization and single-frequency lasers; laser diode chips and packaged laser diodes; and high power optical fiber delivery cables, fiber couplers, beam switches, chillers, scanners and other accessories.
The company blasted fourth-quarter earnings expectations when it posted revenue of $207.4 million for the period. Analysts expected $204 million. The analysts also stressed in the report that IPG’s growth potential in the automotive market, as it is getting auto manufacturers interested in the company’s efforts toward working more effectively with zinc. Its unique multi-laser beam process for welding and brazing zinc as part of production of hot zinc-coated steel could eventually see big demand from automakers.
The Stifel price target for this high quality stock is $107, and the consensus target stands at $105.57. The shares closed trading on Thursday at $99.93.
Newport is a leading global supplier of advanced-technology products and systems to customers in the scientific research, microelectronics, life and health sciences, industrial manufacturing and defense and security markets. Newport’s innovative solutions leverage the company’s expertise in advanced technologies, including lasers, photonics and precision motion equipment, and optical components and subsystems, to enhance the capabilities and productivity of its customers’ manufacturing, engineering and research applications.
The Stifel team cites the company’s deep product portfolio, adding solid value to the targeted customer base. The report states that Newport views its laser, photonics and optical portfolio as one of the top in the industry.
The Stifel price target for the stock is $24, and the consensus is right in line at $24.04. The stock closed trading on Thursday at $19.82.
The photonic and laser industry is huge and growing fast. Any of these four top stocks to buy would be very solid addition to an aggressive growth portfolio.