Stratasys, Ltd. (NASDAQ:SSYS) is a manufacturer of 3D printing equipment and 3D production systems that create physical objects from digital data. Its systems can range from low-cost desktop 3D printers to large, state-of-the-art 3D production circuits. On Friday, May 9, Stratasys announced their first quarter earnings before the opening bell and their numbers were better than many analysts expected. However, shares of the company have dropped almost 10% since.
During their Q1 ’14 earnings report, Stratasys, Ltd. (NASDAQ:SSYS) reported $0.40 earnings per share, meeting analysts’ consensus estimate. During the same quarter last year, Stratasys posted $0.43 earnings per share. The company had profit of $150.90 million for the quarter, beating the consensus estimate of $143.31 million. The corporation’s quarterly proceeds were up 54% on a year-over-year basis. On average, analysts predict that Stratasys will post $2.22 earnings per share for the current fiscal year.
The reason Stratasys, Ltd. (NASDAQ:SSYS) stocks dropped almost 10% since the release of its first quarter earnings is likely due to the company reaffirming its previous 2014 guidance, as well as the current situation where investors are cautious of high-priced technology stocks. However, there has been a continuously strong demand for the company’s 3D printers, which forecasts growth of print materials in the near future, especially since MakerBot started heavily selling Stratasys desktop units to consumer and pro-consumer markets. CEO David Reis stated, “The rapid adoption of our higher-margin products and services remained impressive during the first quarter, which helped drive strong organic revenue growth of 33% during the period and contributed to a significant increase in our gross margin over last year.”
On Monday, May 12, Pacific Crest analyst Weston Twigg maintained a sector perform rating, noting “with new products in the pipeline and a strong demand outlook, [he] think[s] Stratasys is expecting gross margin expansion.” Twigg has a +1.5% average return over the S&P 500 and a 50% success rate according to TipRanks.
Also on May 12, Craig-Hallum analyst Steven Dyer downgrades his rating from BUY to HOLD and lowered his price target from $135 to $90. Dyer has a +5.0% average return over the S&P 500 and a 70% success rate.
On the other hand, on May 12 UBS analyst Steven Milunovich maintained a BUY rating and a $120 price target on the stock. He reasoned that “Stratasys used the quarter’s upside to ramp infrastructure-related SG&A spending tied to the launch of new MakerBot products in 2Q. Increasing sales agents likely represented the bulk of the reinvestment, which should payoff fairly quick.” Milunovich has a -3.2% average return over the S&P 500 and a 39% success rate.
Jeffries analyst Peter Misek also maintained a BUY rating on May 12, but lowered his price target from $155 to $140. He points out the significant shares of consumer space though the MakerBot acquisition and likes the strong patent position of the company. Misek has a -1.5% average return over the S&P 500 and a 50% success rate.]
Carly Forster writes about stock market news. She can be reached at [email protected]