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3D Systems Earnings Show Ongoing Struggle In 3D Printer Market

3D Systems ( DDD ) missed with its Q1 revenue posted early Thursday, its third straight quarter of year-over-year declines in sales, as the 3D printer market resets expectations. Before the open, 3D Systems reported Q1 revenue of $152.5 million, down 5% year over year and missing the consensus of $156.3 million. Excluding the contribution of consumer products and services that the company no longer sells, revenue fell 2%. The company posted flat earnings per share minus items of 5 cents. 3D Systems stock was down nearly 6%, near 14, in afternoon trading in the stock market today , and it touched a seven-week low. Vyomesh Joshi, named CEO last month, sees big market opportunities ahead. “I’ve spent the past month listening to and learning from customers, partners and employees,” commented Joshi said. “I will be focusing on improving quality, reliability and supply chain. The next phase for us is to develop a strategy to drive profitable growth with operational excellence and an appropriate cost structure.” 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. In the company’s earnings conference call, 3D Systems CFO David Styka said demand for professional 3D printers remained soft last quarter. Revenue from professional printers excluding desktop decreased 23%, on a 50% decline in unit sales. “The decrease in units was partially due to the availability gaps for new MultiJet Printers rolled out during the first quarter,” he said. CEO Joshi, on the call, repeated several times he was in a learning mode, but optimistic ahead. “The other important part that I am learning and that’s the vertical approach where we want to go after health care, aerospace, automobile, and also higher education,” he said, “because, if you think about the universities, we need to get a lot of people trained in understanding the 3D market.” 3D Systems did not give earnings guidance. It and and Stratasys ( SSYS ) are the two largest providers of 3D printers. Stratasys is set to report earnings before the market open Monday. Its shares were down nearly 3% Thursday afternoon. 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. 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 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.

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.”