3D Systems Corporation (DDD): Needham Analyst Maintains ‘Hold’ Rating

3D Systems Corporation (DDD): Needham Analyst Maintains ‘Hold’ Rating
Image Credit: 3D Systems Corporation

3D Systems Corporation (NYSE:DDD) shares plunged 10.32% on Tuesday after the company reported disappointing fourth-quarter results and issued a weak guidance for the current fiscal year. The 3D printing major’s Q4 revenues fell 9.5% YoY to $165.9 million. Its non-GAAP earnings came in at 15 cents per share, down from 19 cents in the same quarter a year ago.

3D Systems’ 2017 guidance below expectations

Analysts polled by Thomson Reuters were expecting $176.1 million in revenue and 13 cents in non-GAAP EPS. While the company’s earnings were above the street projections, the Wall Street wasn’t happy with 3D Systems’ guidance for the current year. The company forecasts 2017 revenues between $643 million and $684 million. It expects non-GAAP EPS to be in the range of 51-55 cents.

3D Systems’ revenue projections are below Wall Street estimate of $684.8 million. Needham & Company analyst James Ricchiuti said in a research note after the company’s earnings announcement that 3D Systems “modestly” exceeded Q4 EPS consensus due to a decline in operating expenses. The Rock Hill-based company’s operating expenses declined by more than $10 million to $78.8 million in the fourth quarter.

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James Ricchiuti reiterated a Hold rating on the stock. The analyst blamed the ongoing weakness in 3D Systems’ core prototyping market for the decline in revenues from products, materials, and services. Its growth in 2017 would be driven by the healthcare vertical and new products. Though the company’s financials have been showing improvement since Vyomesh Joshi took over as its CEO, Needham & Company says the demand environment remains challenging.

3D Systems faces increasing competition

3D Systems has been facing stiff competition from behemoths like HP, General Electric, Siemens and other companies. Stratasys is also giving the Rock Hill-based company a hard time. Stratasys is set to report its Q4 earnings on March 9th. According to Piper Jaffray analyst Troy Jensen, the 3D printing industry experienced a QoQ uptick in sales during the fourth quarter.

Not all manufacturers benefited from it, though. Piper Jaffray’s industry checks suggested that Stratasys had strong sales while 3D Systems’ sales were lukewarm. Troy Jensen said the fourth quarter has historically been the strongest for system sales, but he was “encouraged” to see that the trend continued in 2016. Industry checks indicated that demand for 3D printers and materials continued to grow.

The Rock Hill-based company’s shares rose 2.70% to $15.61 in early trading Wednesday.

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