Robots, or automated devices that can perform tasks without human intervention, are witnessing a “new inflection point” with several global stocks leading the way in certain corners of the ecosystem, according to research firm Bernstein. Investment bank analysts wrote in an Oct. 23 research note that the stocks belong to the arc welding sector or “one of the largest robotics applications.” They also noted that such robots account for approximately 10% to 20% of annual robot shipments. Arc welding involves using the heat generated by an arc to melt a piece of metal. Bernstein details that this approach is used in a range of industries including construction, shipbuilding, auto parts manufacturing, aerospace and railroads. “Traditional pre-programmed arc welding robots have become one of the most important robot categories to date,” the analysts stressed. “We estimate that the total number of arc welding jobs in China is approximately 1.3 million full-time welders per year,” they added. “However, traditional, pre-programming-based technologies are not sufficient to replace most of them,” they added, adding that the robots’ functional software can “analyze input data” while also eliminating the need to re-engineer “when the workpiece type or location changes.” programming. Given this potential, the investment bank has identified several themes and stocks it is watching within the arc welding robotics ecosystem. Overweight Stocks One of the favorite themes among investment banks is robot makers. Analysts said they are “direct beneficiaries as smart welding alone can increase the size of the entire robotics market by (more than) 10%” and listed Shenzhen Inovance Technology as a stock they like. Inovance Technology is listed on the Shenzhen Stock Exchange. Bernstein set a 12-month target price on the stock at 64 yuan ($8.98), with upside potential of about 13.4%. In addition to robot makers, the investment bank is bullish on other stocks that will benefit from a “broader robotics renaissance.” These include Hikvision Robotics, a subsidiary of Shenzhen-listed Hangzhou Hikvision Digital, and Tokyo Stock Exchange-listed Keyence. Explaining his bullish stance on the stocks, Bernstein said these companies “have the best capabilities and/or have been successful in driving adoption.” Bernstein set Hikvision’s target price at 40 yuan, with a potential upside of 29.4%. Meanwhile, Keyence has a price target of 82,000 yen ($537.76), which implies about 26.5% upside potential. —CNBC’s Michael Bloom contributed to this report.
