Jefferies’ Analyst Lowers PT on 3D Systems (DDD), Reiterates Hold Rating

By Carrie Williams

Jefferies lower PT on 3D Systems (DDD), reiterate Hold ratingDespite its revenue miss 3D Systems (NYSE: DDD) reported a better than anticipated EPS of $0.14 vs street’s $0.08 for 3Q16. Jefferies analyst James Kisner maintained a Hold rating on the stock while lowering the price target from $15 to $14.50 today. This new PT is an upside of nearly 10% from the current price of $13.16. The stock has a 52-week high of $19.76 and low of $6.

The SC-based 3D printing company had reported 3Q16 revenue of $156.4 million (+3.2% YoY), which was $3.4 million lower than the consensus. Although strong growth was reported in the printing units (+12% YoY) as well as production units, the decline in On-Demand services (-16%) impacted the services revenue (-3% YoY). Kisner anticipates a Q4 EPS of $0.14 vs. consensus of $0.15, as well as $690 million in 2017 Sales driven by Gross Margin for 3D Systems Corporation.

Even though DDD is taking up positive initiatives like streamlining its printing portfolio by discontinuing the likes of CubePro, CubeJet, Project Atlas, and ProX 400 in order to align with its light manufacturing strategy, as well as reinvesting in R&D, Kisner remained firmly on the sidelines. This is due to the belief that very few short term benefits are currently visible for the stock while multiple risks are presently on the forefront for the company.

As Jefferies analyst explained,

“We like DDD efforts to rationalize its printing portfolio but remain on the sidelines due to near-term excess prototyping capacity, concerns around increasing competition in the mid-term, and uncertainties around transition to light manufacturing longer term.”

The concerns do seem to hold water, as General Electric (GE) had recently acquired two European 3-D companies by for a whopping $1.4 billion. However, the glaringly obvious fact remains that the company has a huge potential in the healthcare segment and it accounts for 27.2% of total revenue currently. The Simbionix products of 3D Systems offers the capability to craft anatomical models based on CT images that can be printed in 3D. Similarly, LayerWise is useful for printing implants for spine procedures, while dentists make use of DentWise to create precise fitting dental restorations.

DDD has a rating of ‘Moderate Buy’ on consensus basis according to analysts who weighed in on the stock during the past three months, based on TipRanks.com. The stock has an average analyst price target of $17.88 which is an upside of 35.35% from the current levels.