3D Systems Corporation (NYSE:DDD) released its earnings report for the three months through March on Tuesday before the market opened on Wall Street. The company’s numbers were troubling at first look and led to a huge loss in value. Today has seen a recovery of sorts as the market looks to the company’s fundamental strength and the growth it’s looking for in the years to come.
According to Canaccord Genuity analysts Bobby Burleson and Prabhakar Gowrisankaran, 3D Systems Corporation is still a strong Buy because of the company’s fundamentals. Those fundamentals appeared to be the foundation of today’s return to form. At time of writing shares in 3D Systems Corporation (NYSE:DDD) rose by more than 5%. That left total returns for the last five trading days at -2%.
3D Systems falls on earnings
The huge loss of value suffered by 3D Systems Corporation (NYSE:DDD) on Wednesday’s market was attributed to a fall in earnings an huge investor expectations. The first three months of 2014 have seen the rise of 3D printing as a major theme in the marketplace, but few of the companies in the industry have been successful in holding the positive attention of investors.
A fall in gross margins means that growth prospects may not be as hoped in the medium term. That may be significant given the amount of attention that the 3D printing industry is currently getting. Whispers of possible acquisitions have driven the prices of many 3D printing concerns upwards, and it seems that some big corporations are looking to compete in the industry.
Whatever the future of the 3D printing industry, it seems that questions of the future of 3D Systems Corporation (NYSE:DDD) rouse quite different opinions. The Canaccord Genuity analysts reckon the company’s shares should hit $75 in the next twelve months, even as growth stocks are compressed by market pessimism. 3D Systems is one of the big players in the market, and it will have to demonstrate its strength in order to justify valuing it for growth.
3D Systems growth remains within reach
According to Bobby Burleson and Prabhakar Gowrisankaran from Canaccord Genuity 3D Systems Corporation (NYSE:DDD) has strong fundamentals that should make it easier for investors to price it for growth. The analysts “continue to expect strong share appreciation from these levels” based on the company’s guidance for the year ahead and Canaccord’s own model of the firm’s financials.
As a tech growth story 3D Systems Corporation (NYSE:DDD) is in a different position than most. The company is actually profitable, and its money comes in from sales of hardware and services to enterprise for the most part. It has pushed itself into the consumer market in order to compete, but it concentrates on enterprise in order to pull in cash.
3D Systems Corporation (NYSE:DDD) has a strong presence in that business, and the company appears to be seeking to maintain an appreciably healthy brand. If it can do that it may build a moat difficult for any competitors to cross. That would give it space to outpace the growth of its rivals, and justify its current multiple of more than 100 times 2013 earnings.