3D Systems Corporation Needs To Prove Ability To Execute Strategy

3D Systems needs to prove its ability execute its strategy after its mistakes over the past year, according to analysts at Morgan Stanley.

3D Systems Corporation Needs To Prove Ability To Execute Strategy

In a research note to investors, Morgan Stanley analysts noted that 3D Systems highlighted significant goals including technology leadership, high-quality products, and strong company partnership during its analyst meeting.

According to the analysts, the company’s goals are great, but it “needs to prove it can execute on strategy given its missteps over the last year.”

3D Systems maintains value proposition for 3D printing

During the meeting, 3D Systems emphasized the benefits of its product portfolio and diverse revenue model. The company also maintained its unique value proposition for 3D printing that it is ideal for highly-customized applications.

The company outlined its plan to improve its go-to-market capabilities with a comprehensive partner program. 3D Systems Corporation also expressed its intention to improve time-to-market for new products.

3D Systems signed a cooperative R&D agreement with Naval Sea Systems Command’s (NAVSEA) Naval Surface Warfare Center Carderock Division (NSWCCD). Under the agreement, the company and the U.S. Navy will partner in developing and evaluating 3D printing technology and materials for military uses.

The analysts noted that 3D Systems did not address concerns regarding the market size or lower adoption rates of 3D printing, which created uncertainty regarding its near-term growth.

Neil Orringer, vice president of Alliances and Partnerships at 3D Systems said, “The US Navy is at the forefront of a concerted military effort to integrate 3D printing into their operations.Through their Print-the-Fleet initiative, the Navy is educating sailors on the latest in digital manufacturing and accelerating adoption of 3D printing.

“We’re proud that our technology—our direct metal printing and our advanced polymer materials—are going to play an integral part in the Navy of the future,” added Orringer.

3D Systems stock to remain under pressure

The analysts expected the shares of 3D Systems to remain under pressure until it shows signs of sustainable improvement in executing its strategies. They maintained an Equal Weight rating for the stock.

The stock price of 3D Systems declined 2.3% to $22.09 per share. Over the past 52 weeks, its shares traded between $20.82 and $69.56 per share. The company lost more than 59% of stock value over the past year.

3D Systems stock performance.JPG2

3D Systems anticipated a decline in operating expenses—a large portion of the cost savings will come from integrating previous acquisitions.

The analysts commented that the company’s opex level at almost $100 million was still lower than its closest competitors. According to them, the company is still under-investing to support the growth potential of the industry.”