If you have been watching IPG Photonics (IPGP) lately, you probably caught wind of the company’s big reveal: the first public display of its CROSSBOW MINI 3 kW high-energy laser system at the DSEI UK defense expo. This is not just a new product; it is a high-profile bet on directed-energy solutions for countering drone threats. The event caught investor attention, especially since the CROSSBOW MINI system is already demonstrating real-world success and seems positioned for both immediate deployment and future growth in the defense market.

The timing of this announcement comes after a stretch of meaningful momentum for IPG Photonics’ stock. Over the past year, shares have gained nearly 33%. Recent months have also been positive, with a 22% advance in the past three months and a 10% gain just this month. While the long-term picture shows the stock still recovering from deeper declines seen over the past three and five years, the latest product news and stronger recent buying suggest investors are reevaluating IPG’s place in the rapidly evolving defense tech landscape.

With all this in mind, investors may be considering whether IPG Photonics is presenting a compelling entry point at current prices or if the market is already anticipating significant growth driven by the CROSSBOW product line.

Most Popular Narrative: 3% Overvalued

The most widely followed narrative suggests that IPG Photonics is currently trading slightly above its estimated fair value. This reflects optimism but also caution about future performance. This assessment is based on consensus expectations that consider projected growth in revenue and profit margins, along with industry and company-specific factors.

Recent product innovations such as the CROSSBOW directed energy system, validated with multiple unit deliveries and key partnerships (for example, Lockheed Martin), open up opportunities in defense and critical infrastructure. These factors support both revenue acceleration and improved operating leverage.

Curious about the numbers shaping this verdict? Hints of aggressive growth in new markets, a bold turnaround in earnings, and industry-defying profit targets fuel this price call. Want to see how these projections stack up against traditional industry standards? Discover what underpins this valuation and what makes it tick.

Result: Fair Value of $80.20 (OVERVALUED)

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

However, ongoing geopolitical tensions and continued weakness in core markets could derail growth expectations. These factors may serve as potential catalysts for a revised outlook.

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

Another View: SWS DCF Model Offers a Different Perspective

While the analyst consensus sees IPG Photonics as slightly overvalued, our DCF model paints a much starker picture, suggesting the shares could be significantly above intrinsic value. Which approach truly reflects market reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( check out IPG Photonics for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own IPG Photonics Narrative

If you see the story differently or want to dig into the details on your own terms, you can craft a custom narrative in just minutes. Do it your way.

A good starting point is our analysis highlighting 1 key reward 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.