solid guidance for this year and next. However, analysts have differing opinions on whether the 3D printer maker will be able to hit that $1 billion revenue target it set for the 2015 fiscal year.
JPMorgan remains Neutral on 3D Systems
Analyst Paul Coster and his team at JPMorgan have reiterated their Neutral rating and $54 per share price target for 3D Systems Corporation (NYSE:DDD) in the wake of the company’s latest report. They believe it might be a bit of a stretch for the company to hit that $1 billion target next year, calling it “somewhat attainable” because it requires a 43% year over year increase from the midpoint of the company’s 2014 guidance of between $680 million and $720 million. They say acquisitions could help with hitting that target but that they are still cautious about how much leverage 3D Systems will be able to realize in its “evolving business model.”
They’re referring to the trend they see in 3D Systems Corporation (NYSE:DDD) moving toward “an operating model” with a margin structure. Increased investment activities have been weighing on the company’s margins, as it guided for 55% to 60% in gross margins at a $750 million to $1 billion revenue run rate. That’s compared to their previous target of 60% on $500 million in revenue.
The JPMorgan team sees 3D Systems Corporation (NYSE:DDD) as being overvalued but note that the company’s fundamentals “are compelling” and that there could be a number of positive catalysts coming up.
RBC Capital remains Outperform-rated on 3D Systems
Analyst Amit Daryanani and his team at RBC Capital are a bit more positive on 3D Systems Corporation (NYSE:DDD). After the company’s earnings report, they kept their Outperform rating and $96 per share price target. They believe the company “did a commendable job” in setting forth its two-year roadmap, which indicates not only expectations of $1 billion in revenue next year but also a trough in gross margins in the first half of this year. 3D Systems expects margins to rise next year.
They note that 3D Systems Corporation (NYSE:DDD)’s stock movement will be driven by its ability to execute on its revenue targets while keeping expenses within the ranges they provided for the current calendar year. They continue to see 3D printing as a “massively disruptive technology” in which they think 3D Systems will benefit and gain market share. They don’t seem to see much of a problem with the company’s targets.
