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3D Printer Market Braces For Earnings From 3D Systems Amid Tumult

3D Systems ( DDD ) is set to report first-quarter earnings Thursday, followed by rival Stratasys ( SSYS ) next Monday, likely providing a clearer indication of whether the runup in both stocks this year — or the more recent downturn — is justified. The consensus on 3D Systems is for revenue of $156.3 million, down 3% year over year, and earnings per share minus items of 5 cents, flat, as polled by Thomson Reuters. Shares of 3D Systems and Stratasys were hammered in 2015, as both posted quarter after quarter of disappointing earnings and sales. Stratasys stock, however, has nearly doubled since hitting a six-year low of 14.88 three months ago, and 3D Systems has more than doubled since hitting a five-year low of 6 three months ago. Both stocks, though, have faded in the past week. And 3D Systems shares were near 15, down 3%, in midday trading in the stock market today . Stratasys stock, too, was down nearly 3% midday Wednesday, near 22. The rise of both stocks most of this year was partly fueled by Q4 earnings from both companies that beat expectations, raising hopes the top-two 3D printer makers are poised for a rebound. But 3D Systems and Stratasys executives took a cautious tone about the road ahead. 3D Systems got a bounce when it announced Vyomesh Joshi as CEO on April 4. Joshi had been executive vice president of the imaging and printing business of HP Inc. ( HPQ ), formerly part of Hewlett-Packard before its split. HP plans to enter the 3D printer market this year. Needham analyst James Ricchiuti last week lowered his rating on 3D Systems to hold from buy, “as shares might be pricing in too much,” he wrote. “Notwithstanding solid sequential improvement in Q4 from the publicly traded 3D printing companies, we believe business remains challenging, compounded by the normal seasonal weakness experienced in the March quarter,” Ricchiuti wrote. 3D printer makers  ExOne ( XONE ) and Voxeljet ( VJET ) are set to report earnings on May 11 and May 13, respectively, both before the market open.

Have 3D Systems, Stratasys Stocks Traveled Too Far Too Fast?

With a strong leap in the stock prices of 3D Systems ( DDD ) and Stratasys ( SSYS ), some analysts question if the rise was too far too fast. Needham analyst James Ricchiuti on Tuesday lowered his rating on 3D Systems to hold from buy, saying further upside in the stock over the near term will be challenging. He says the turnaround at 3D Systems should be more gradual than the market is anticipating. It follows a recent downgrade of 3D Systems and Stratasys from Citi based on stock price valuations of both companies. Shares of 3D Systems and Stratasys were hammered in 2015 as both posted quarter after quarter of disappointing earnings and sales. This year, Stratasys stock has nearly doubled since hitting a six-year low of 14.88 three months ago. 3D Systems has nearly triple since hitting a five-year low of 6 three months ago. “3D Systems shares are now above our 12-month target price,” Ricchiuti wrote in a research note. “With the stock trading at 32 times our 2017 EPS estimate, the market appears to be pricing healthy upside to estimates.” The rise of both stocks were partly fueled by the Q4 earnings reports of both companies that beat expectations, suggesting the worst might be over and raising hopes the top two 3D printer makers are poised for a rebound. But that wasn’t the message that 3D Systems and Stratasys tried to signal, as comments from company executives during the conference call were of a cautious tone about the road ahead. 3D Systems got a further bounce when it announced Vyomesh Joshi as CEO on April 4. Joshi had been executive vice president of the imaging and printing business of HP Inc. ( HPQ ), formerly Hewlett-Packard before its split. HP plans to enter the 3D printer market this year. 3D Systems stock was near 18, down 2%, in afternoon trading in the stock market today . Stratasys was trading near 26, up a fraction. 3D Systems is set to report first-quarter earnings on May 5 and Stratasys on May 9, both before the market open. The consensus on 3D Systems is revenue of $156.3 million, down 3% year over year, and earnings per share minus items of 5 cents, flat, as polled by Thomson Reuters. Stratasys sales are seen rising 4.5% to $164.8 million as it swings to a 4-cent per-share loss from a 4-cent profit. “Notwithstanding solid sequential improvement in Q4 from eight of the publicly traded 3D printing companies, we believe business remains challenging compounded by the normal seasonal weakness experienced in the March quarter,” Ricchiuti wrote.

HP Acquisition Of 3D Systems ‘Unlikely’; Citi Downgrades DDD

It’s “highly unlikely” HP Inc. ( HPQ ) will acquire 3D Systems, says Citigroup, which downgraded both 3D Systems ( DDD ) and its rival Stratasys ( SSYS ) on valuation after their stocks jumped on Thursday. HP plans to enter the 3D printer market this year. 3D System stock was down 4% in early trading in the stock market today , after rising 10% on Thursday. Stratasys stock was down 8.5%, negating a 5.9% rise on Thursday. Another 3D printer maker, ExOne ( XONE ), was down more than 3% early Friday. Citigroup analyst Kenneth Wong downgraded 3D Systems to sell and downgraded Stratasys to neutral. “(3D System) shares have nearly tripled since troughing mid-February and have doubled year-to-date, despite (3D printer) market conditions that remain unsettled. We believe the upside scenarios from operational efficiencies upside to take-out potential are overstated,” said Wong in a research note. 3D Systems on April 4 named Vyomesh Joshi as its CEO. Joshi had been executive vice president of the imaging and printing business of HP, formerly Hewlett-Packard before its split last year. “We expect Joshi to bring a fresh set of eyes to DDD’s strategic growth and profit initiatives,” Wong said. “Investors believe Joshi’s HP roots enhance the possibility of an HP acquisition of DDD. While we see how bullish investors might connect the dots here, (we) believe that an acquisition by HP is highly unlikely.” Bank of America Merrill Lynch upgraded 3D Systems on Thursday to buy on views that Joshi will spark a rebound at the company. Stratasys’ stock run-up also raises valuation issues, said the Citigroup analyst. “We don’t believe ‘good enough results’ will be sufficient with the recent boost in sentiment, and with industry checks still soft, we believe near-term upside is limited,” said Wong. “Our conversations with those in the industry suggest unit volumes have held, but there has been a downshift in buying towards smaller lower priced systems. “Contrary to investor expectations, we still believe that under ‘normal’ operating conditions, SSYS can generate double digit margins.”