67 WALL STREET, New York - October 16, 2013 - The Wall Street Transcript has just published its Electronic Components Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Mobile Device Consumer Demand - Mobile Trends in Emerging Markets - Smartphone Operating Systems - Outsourcing and Offshoring Trends - Electronics Manufacturing Supply Chain - Automotive, Data Center and Mobile Spending
Companies include: Coherent Inc. (COHR), IPG Photonics Corporation (IPGP), Newport Corp. (NEWP), Rofin-Sinar Technologies Inc. (RSTI) and many others.
In the following excerpt from the Electronic Components Report, the leading analyst for LASER technology stocks discusses the outlook for his sector for investors:
TWST: You cover laser manufacturers. What are some of important investment themes you are seeing right now in that space?
Mr. Miller: I cover the four primary laser manufacturers: Coherent (COHR), IPG Photonics (IPGP), Newport (NEWP) and Rofin-Sinar (RSTI). It is a diverse group, both in terms of the type of lasers they manufacture and the diversity of end markets served. Because of the diversified worldwide use of lasers, people tend to invest in these companies as a group, based on how they think the global macroeconomy is going to perform.
In particular, China has become a very important market for the laser companies over the past five years. A significant part of the revenue for these companies, ranging from 20% to 30% of revenue, is now coming from China. Because of that correlation, the encouraging news from China about a pickup in their economic activity is helping this group. Also, the fact that Europe is finally showing some signs of life represents another plus for China, in that 25% of China's typical exports go to Europe.
Two other key markets are expected to do well next year, autos and microelectronics equipment. So the stars appear to be aligning for the group. Although each of these companies manufactures lasers, they all have their differences in terms of exactly what they make and what end markets they serve.
TWST: In terms of the relationship with China, is that primarily in one area, such as manufacturing, or is it in several different areas?
Mr. Miller: Manufacturing is the major use of lasers in China. Lasers are used for a variety of materials and in a variety of products. Textile, machine tool, solar and microelectronics are some primary areas, so there is a real diversity of applications for lasers in China. In China, a lot of the firms that employ lasers are usually smaller to midsized firms, which makes them susceptible to changes in credit conditions.
TWST: Can you go through the four companies you cover and talk a bit about them for us?
Mr. Miller: I have covered both Newport and Coherent for over 13 years. We have "buys" on both. Three areas that they both compete in are microelectronics, defense and scientific. Their lasers are used in research, metrology, semi lithography, and also for scribing and cutting applications. Last quarter...
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