JPMorgan analysts Paul Coster, Mark Strouse and Paul J Chung have introduced FY 2016 estimates for 3D Systems Corporation (NYSE:DDD) in a report dated July 2, 2014. The analysts are projecting 25% revenue growth with a rise in operating margin by 200 bps or 24.5% year over year, which is marginally below the record margins of 25.3% achieved in FY 2012.

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Estimates below the peak numbers

The JPMorgan analysts expect FY 2016 sales of $1.13 billion, which is slightly below the 28% growth in FY 2015. EPS for 2016 is expected to come in at $1.56. 3D Systems will post second quarter results on July 31, and the analysts expect it to report an EPS of 16 cents on revenue of $156.5 million.

The company recently hosted an analyst day, so the JPMorgan team believes the company will update its guidance of 73 cents to 85 cents EPS on $695 million to 735 million revenue for FY 2014. Believing the stock to be “fully-valued,” they have a Neutral rating on 3D Systems and suggest investors hold their existing positions in the stock. For December 2015, the analysts have given a price target of $54.50, compared to $37.00 for December 2014.

Going well, execution risk remains for 3D Systems

3D Systems is a dominating force in the 3D printing industry, clenching an 18% share in 2013 according to Wohlers Report 2014. The company has taken over more than dozen companies in quick time. The JPMorgan analysts are expecting 25% CAGR industry growth in 2015, but for 2015 to 2020, a CAGR of 20% is expected.

According to the analysts, 3D Systems is performing well by capitalizing on a massive and diverse market opportunity and satisfying a premium multiple, but margins are below the expectation. Any increase in revenue would be counterbalanced by a marginally “disappointing end-state business model.”

The analysts believe that the company is in a phase of high execution risk as it is all set to launch a series of new products by the end of 2014, along with controlling R&D related to multiple print-engines and integrating a large number of acquisitions. Managing all at the same time increases the chances of execution risk.