Stratasys (NASDAQ:SSYS) is the most preferred pick of JPMorgan in 3D printing industry. And there are pretty good reasons for that. The 3D printing industry is expected to grow at 25% rate through 2015, and 15% between 2016 and 2020. JPMorgan analysts Paul Coster and Mark Strouse said in a research note that Stratasys is largely defining the industry. So, it should grow at least with the market.

Stratasys

JPMorgan establishes December 2015 PT of $138 on Stratasys

Moreover, the research firm believes that the company’s Polyjet product line should snatch some market share from 3D Systems Corporation (NYSE:DDD) in the professional desktop segment. Stratasys’ MakerBot establishes the company as a dominant player in the entry-level professional market. Stratasys, along with Objet, commands 55% share in the professional and production market by unit volume. The company has an industry-leading R&D team, and a strong distribution network of more than 250 agents and resellers worldwide.

In its research note on July 2, JPMorgan established December 2015 price target of $138 compared to its December 2014 PT of $104. JPMorgan maintains its Overweight rating on the stock. Coster and Strouse valued Stratasys at 35x FY16E pro forma EPS. The research firm forecasts the company’s FY2016 revenues to come in at $1.10 billion, showing at 23% YoY growth. Operating margins are expected to improve slightly to 22.5%. The analysts forecast Stratasys’ FY2016 earnings of $3.94 per share.

Stratasys second quarter earnings preview

Stratasys is expected to report its fiscal second quarter results early next month. Wall Street forecasts the company to report $156.4 million in revenues with $0.44 in EPS. JPMorgan is a bit more optimistic, expecting revenues of $157.3 million and earnings of $0.46 per share. The company may revise its full year guidance upward to reflect the recent acquisitions of Harvest Technologies and Solid Concepts. The full year consensus estimate of $690 million revenues and $2.20 EPS perhaps doesn’t include the deals. JPMorgan’s estimates of $705 million in revenues and $2.16 in EPS include these acquisitions.

JPMorgan says Stratasys is trading at a discount to its peers. The stock is attractively valued, and risk-reward ratio looks favorable.

Stratasys shares closed Wednesday at $116.28.