3D Systems shares fell 6.16% to $12.35 on Monday after Needham & Co analyst James Ricchiuti slashed his 12-month price target from $28 to $22. Ricchiuti reiterated his Buy rating on the stock, though. 3D Systems is scheduled to release its fiscal second quarter results on Thursday, August 6 before the market opens.
Needham’s estimates are ‘still too aggressive’
Needham believes that yet another downward revision to the consensus estimates is priced into the 3D printing company’s shares. The research firm also reduced its 2H, 2015 and FY2016 estimates. Ricchiuti believes his revenue estimates for the current and next fiscal years are “still too aggressive,” especially considering the slow demand in 3D printing industry.
However, the analyst acknowledged that 3D Systems has been cutting costs that would mitigate the risk of huge downside to EPS estimates. Wall Street expects 3D Systems to report $173.19 million in Q2 revenue, up 14.30% YoY. Earnings are expected to decline to 9 cents a share from 16 cents in the same quarter a year ago. For the full-year, analysts forecast $746.41 million in revenue and $0.52 per share in EPS.
The Rock Hill-based company’s first quarter results were disappointing. Poor Q1 results prompted the company management to withdraw its full-year guidance. Worse, its backlog declined 19% QoQ to $37.8 million, indicating that demand for its products would be under pressure in the coming quarters. 3D Systems shares have declined more than 61% year-to-date.
Can 3D Systems convince investors?
Last week, UBS analysts Steven Milunovich and Peter Christiansen reduced their price target on the stock from $18 to $10. They also reduced their FY2015 revenue guidance from $752 million to $720 million, and cut the EPS estimate by more than 50% to 32 cents a share. UBS analysts believe that 3D Systems won’t be able to assure investors that demand is improving.
Weak guidance offered by 3D Systems’ rival Stratasys indicates that the slowing growth in market demand is more than just a temporary obstacle.
3D Systems shares were up 1.38% to $12.52 in pre-market trading Tuesday.