3D Systems Corporation (NYSE:DDD) shares fell 1.61% yesterday to $35.46. The stock has declined more than 55% over the last 12 months amid execution risks and concerns over the entry of new competitors in 3D printing industry. On Thursday, Jefferies analyst Jason North reduced his price target on the stock from $46 to $42, though he maintained a Buy rating.
3D Systems can protect its near-term profits
The 3D printing leader has acquired about 50 companies in the past few years. The company needs to show flawless execution to integrate those acquisitions. North said the execution risk was clearly evident in the launch of the Cube 3, which was delayed. Even when the product arrived, the supply was limited, and early customers faced trouble with the cartridges.
Further, the entry of heavyweights like Hewlett-Packard, Autodesk, Canon, IPG Photonics, Epson and Ricoh could force 3D Systems to cut its prices. Jefferies said that the Rock Hill-based company could protect its near-term profits by cutting prices. North cut the price target to reflect a change in his 2016 estimate. Jefferies now estimates an EV/sales ratio of 3.5x, assuming 20% discount to peers.
Jason North spoke to most of the new entrants in 3D printing. He believes that they could grow to become dominant 3D printing players. For instance, Autodesk wants its Spark 3D printing software to become an industry standard. Last month, Hewlett-Packard unveiled its Multi-Jet Fusion, which will be available in 2016. HP’s process is similar to 3D Systems’ Z Corp binder jetting MJM process.
3D Systems director buys shares
3D Systems released its third-quarter results earlier this month. The company reported net earnings of $3.1 million, missing the consensus estimate of $6.9 million. Third-quarter revenues came in at $166.9 million. For the full year, the company forecasts revenue between $650 million and $690 million with earnings between 70 and 80 cents per share.
Separately, 3D Systems director Kevin Moore revealed in an SEC filing that he purchased 5,000 shares of the company in the open market transaction dated Nov.19. He purchased those shares at the average price of $35.98 per share. Following the transaction, Moore directly owns 7,734 shares of 3D Systems.
3D Systems shares inched up 1.30% to $35.92 in pre-market trading Friday.