Stratasys, Ltd. (NASDAQ:SSYS) has reported impressive first quarter results on May 9. The 3D printing company’s Q1 sales soared 54% to $151 million, beating the Wall Street consensus of $143 million. Earnings of 40 cents a share were in line with the consensus estimate, and up 33% from the previous year. Gross margins of 60.9% came in above the UBS estimate of 57.8%. Gross margins improved by 70 basis points from the fourth quarter, showing improvements in both the product and services segments.

Stratasys boosts its infrastructure-related expenses

While Stratasys, Ltd. (NASDAQ:SSYS)’s product sales rose 56% YoY, unit shipments soared a whopping 654% to 8,802, thanks to the MakerBot acquisition. Demand for the high-end Connex 3D Systems and Fortus also improved during the quarter. Anyway, Stratasys’ operating margins declined QoQ during the quarter due to higher operating expenses related to growth initiatives. Increased SG&A expenses pulled the operating margins down to 15.1%, well below the company’s target of 20%-25%.

Stratasys DB-1

Stratasys, Ltd. (NASDAQ:SSYS) management reiterated its full-year revenue guidance of $660-$680 million and EPS forecast of $2.15-$2.25. UBS analyst Steven Milunovich said in a research note that the company used the first quarter’s strong growth to boost infrastructure-related expenses as it gears up to launch new MakerBot products in the current quarter. Bulk of the investment was in increasing the sales staff, which the research firm says will pay off quickly. Meanwhile, Deutsche Bank analyst Sherri Scribner said that MakerBot should drive the company’s growth in 2H2014.

Solid Concepts, Harvest likely to add 2 cents to Stratasys’ FY14 earnings

However, Steven Milunovich was disappointed that Stratasys, Ltd. (NASDAQ:SSYS) didn’t provide any details of impact from Solid Concepts and Harvest Technologies. UBS estimates these deals to add 2 cents to the company’s 2014 earnings and 16 cents to its 2015 earnings. 3D printing stocks have fallen more than 30% this year so far. UBS says the second-half momentum would reverse the sentiment.

UBS has lowered its price target on the stock from $130 to $120, though it maintains a Buy rating. The research firm said that the new price target reflects its revised EV/sales target multiple of 6x 2015 sales estimate of $954 million. In contrast, Deutsche Bank maintains its Buy rating on the stock with $160 price target.

Stratasys, Ltd. (NASDAQ:SSYS) shared declined 1.45% to $88.60 at 12:05 PM EDT on Monday.