3D Systems Corporation (NYSE:DDD) will release its next earnings report on Friday, and analysts at Bank of America are not expecting that report to be good. They downgraded the company’s stock from Buy to Underperform and slashed their price target from $90 to $65 per share today.
Four reasons to downgrade 3D Systems
The analysts provide four main reasons they decided to downgrade 3D Systems Corporation (NYSE:DDD) ahead of this week’s earnings report. First, they expect the company’s growth rate to peak this year and that margins will be sacrificed for topline growth. Second, they see the company’s recent investments as simply playing catchup to other companies rather than pushing for incremental growth.
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Third, they say although 3D Systems Corporation (NYSE:DDD)’s recent acquisitions have added near-term growth, they think those acquisitions will dilute the company’s long-term organic growth. In addition, they see the acquisitions as increasing the execution and integration risks right now. And fourth, they said although the recent partnerships with major companies like Motorola Mobility, Hershey’s and Hasbro are exciting, they believe margins will come under pressure and question whether those endeavors will be successful.
Other analysts like 3D Systems
Of course Wall Street wouldn’t be what it is without disagreements among analysts. Earlier this month, Citigroup actually boosted their price target from $68 to $78 per share. Needham and Company continues to rate 3D Systems Corporation (NYSE:DDD) as a Buy as well.
However, the general consensus seems to be rather negative among analysts this week heading into earnings, as a handful of firms have downgraded it. Zacks moved its rating on 3D Systems Corporation (NYSE:DDD) from Neutral down to Underperform, while William Blair reiterated its Underperform rating. Credit Suisse downgraded the stock from Outperform to Neutral last month.
On average, analysts are expecting 3D Systems Corporation (NYSE:DDD) to post earnings of 19 cents per share on revenue of $155 million for the fourth quarter. For the full year, analysts are looking for earnings of around 85 cents per share on $513 million in revenue.