3D Systems Corporation (NYSE:DDD) has raised $317 million by selling 5.95 million shares in a secondary offering earlier this week. Many argued that the offering came at a poor time as the stock has tumbled about 44% YTD. Pacific Crest analyst Weston Twigg says that the stock offering only reinforces investor fears that 3D Systems is growing mainly through mergers & acquisitions. Notably, the company has purchased 45 companies for about $520 million in the last four years.
3D Systems eyeing deals in the range of $100-$300 million
Anyway, RBC Capital Markets analyst Amit Daryanani says that, following the capital raise, a large deal seems to be imminent. It’s the largest amount of proceeds for 3D Systems Corporation (NYSE:DDD). In May 2013, the 3D printing company had raised $270 million. Daryanani says that the offering enhances the company’s cash position to pursue acquisitions and organic growth initiatives. RBC Capital Markets has an Outperform rating on the stock with $78 price target, which reflects about 50% upside potential.
After talking to 3D Systems Corporation (NYSE:DDD) management, RBC Capital said that the offering doesn’t reflect working capital issues. The Rock Hill, South Carolina-based company is willing to focus on larger size deals, most likely in the range of $100-$300 million. With more than $620 million in cash, 3D Systems can close deals quicker than most peers. The company has a large product portfolio, but it wants to build out its services, software and materials development offerings to maintain its leading position in the industry.
Robtec and Medial Modeling would be accretive to 3D Systems’ FY14 earnings
Though 3D Systems Corporation (NYSE:DDD) didn’t mention the impact of the stock offering on its FY2014 guidance, RBC believes that recent acquisitions such as Robtec and Medical Modeling would be accretive to its current year earnings. 3D Systems forecasts its full year revenues in the range of $680-$720 million with 73-85 cents a share in earnings. The company may provide further details at its upcoming analyst day on June 10.
3D Systems Corporation (NYSE:DDD) stock has an average Buy rating from 24 research firms covering the stock. Two analysts have a Sell rating, another six have assigned a Hold recommendation. All others have a Buy or Outperform rating. The average 12-month price target is $72.74.
3D Systems Corporation (NYSE:DDD) shares gained 1.17% to $51.97 in pre-market trading Friday.