3D Systems shares fell 6.8% to $16.42 on Thursday after Piper Jaffray issued a bearish research note on the stock. Piper Jaffray analyst Troy Jensen cut his price target on the stock from $18 to $16, and reiterated an Underweight rating. 3D Systems shares have declined more than 43% in the last three months.
3D Systems likely to miss Q2 estimates
Piper Jaffray expects significantly lower growth in the second half of the year. As a result, it has lowered its EPS and revenue estimates for 2015 and 2016. Troy Jensen also expects 3D Systems to miss the Q2 Street expectations. Wall Street on average expects the 3D printing firm to report 9 cents in EPS on revenues of $173.90 million, up 14.80% from $151.51 million in the same quarter a year ago.
Jensen said 2015 would be a “reset year” for 3D Systems and other companies in the 3D printing space. He expects the sector to start showing some growth in 2016. 3D Systems, one of the world’s most innovative growth companies, has been aggressively expanding its footprint in military and education sectors. Earlier this week, the Rock Hill-based company teamed up with Douglas Stewart EDU to sell more of its printers to students, schools, and universities. The company said it would prepare students for tomorrow’s careers in health, science and beyond.
3D Systems to face execution challenges
Piper Jaffray believes 3D Systems will continue to face execution challenges, channel headwinds, and concerns about product quality. The research firm said there was a sequential improvement in demand for 3D printing during the June quarter. 3D Systems stock has recovered some of the Thursday’s losses, currently up 1.80% to $17.01.
In May, the company signed an agreement with the U.S. Navy’s Naval Sea Systems Command to jointly develop 3D printing technology and materials for military use. The Navy has accelerated adoption of 3D printing through its Print-the-Fleet initiative. The Navy wants to make sure that 3D printing could be qualified as safe, reliable, effective, and repeatable use.