Voxeljet AG (ADR) (NYSE:VJET) reported its first quarter results last week on Thursday. The German 3D printing company’s revenues were in-line with the consensus estimates. But Jefferies analyst Peter Misek has slashed his price target on the stock from $27 to $13. Notably, Misek had previously lowered the price target from $40 to $27 on March 31. Jefferies maintains its Hold rating on the stock. 

Voxeljet VJET

Systems business hurts Voxeljet’s gross margins

Voxeljet AG (ADR) (NYSE:VJET) reported a net loss of $0.04 per share, while analysts were expecting the company to report deeper losses of $0.07. Revenues in the quarter jumped to €2.74 million from €2.39 million in the corresponding quarter last year. Voxeljet said it sold two new machines during the March quarter. The company had sold one new and one old machines in the corresponding quarter a year ago.

Voxeljet AG (ADR) (NYSE:VJET)’s gross margins of 39.4% came in below the consensus estimates of 43.1%. Margins were hampered by its Systems business, but were in part offset by the Services division. Systems margins plunged from 48% in the fourth quarter to 30% in Q1 because one of the two printers sold during the latest quarter was given at a discount to a research partner. Services gross margins improved from 28% in the fourth quarter to 48%, thanks to better mix.

Will Voxeljet adopt a vertically-integrated service bureau model?

Jefferies says that Voxeljet AG (ADR) (NYSE:VJET)’s technology is exciting. But its ExOne has experienced pushback from foundry customers, raising concerns that the ExCast may also face same issues. Peter Misek is uncertain if the company will have to adopt a vertical integrated service bureau model as well. Voxeljet recently announced a service center in Detroit. The Friedberg-based company plans to install two sand and two plastic printers at its Detroit center. Jefferies analyst Misek is concerned about the ramp in the sand printer utilization.

Voxeljet AG (ADR) (NYSE:VJET) has a backlog of six printers, and the company expects to ship most of them by the end of this year. The company recorded bookings of four units in the first quarter, compared to zero bookings in Q4. Voxeljet reaffirmed its full-year revenue guidance of €18 million, implying a growth rate of more than 50%. Gross margins are likely to be in the range of 40%-45%.

Voxeljet AG (ADR) (NYSE:VJET) shares plunged 2.65% to $13.24 at 11:45 AM EDT on Monday.