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Analysts Neutral On 3D Systems Corporation After Q4 2017 Earnings

3D Systems Stock Q4 2017 Earnings

3D Systems Corporation (NYSE:DDD) released its Q4 2017 earnings results on Wednesday, and even though the company preannounced positive results, investors still had a knee-jerk reaction. 3D Systems stock skyrocketed by more than 10% out of the gate on Thursday, but analysts generally remain neutral on it, although at least two firms have raised their price targets.

3D Systems Q4 2017 earnings beat expectations

Stifel analyst Patrick Newton boosted his price target for 3D Systems stock from $11 to $12 following the Q4 2017 earnings release, but he maintained his Hold rating. He said that this year is still an investment year for the company, and Q4’s growth was off an easy comparison.

Piper Jaffray analyst Troy Jensen raised his price target for 3D Systems stock from $9.40 to $10 per share and reiterated his Neutral rating. He believes the 3D printing company is finally “turning the corner following a disappointing 2017” filled with legacy product problems and growing competition.

He said the Q4 2017 earnings release revealed “nice growth” in Europe, the Middle East, and Africa and the Asia-Pacific region, which was a positive shift from the rest of the year. He feels management commentary on this year’s upcoming product launches was “upbeat,” and he’s seeing “more positive signs” from the company. However, he’s still cautious on 3D Systems stock due to growing competition in the 3D printing industry.

3D Systems’ Q4 2017 earnings beat estimates

3D Systems reported $177.3 million in sales, which beat the consensus by $15.2 million due to strong services sales. The Q4 2017 earnings release revealed a gross margin of 48.3%, which was a significant improvement from the 38.3% recorded in Q3, although still slightly lower than the year-ago margin of 50%. On a non-GAAP basis, 3D Systems’ Q4 2017 earnings came in at 5 cents per share, beating the consensus of 1 cent per share.

Materials revenue grew 8.3% sequentially to $42.7 million, while services revenue increased 14.7% to $74.9 million. Jensen said the strength in materials was due to “increased utilization rates of install base with printer unit sales growing due to heavy discounting.” The company’s healthcare business drove its strong services sales during Q4.

KeyBanc analyst Weston Twigg noted that the results were in line with the company’s preannouncement guidance, which was $176 million to $178 million in revenue and non-GAAP earnings of 3 cents to 5 cents per share. Healthcare revenue was up 13% year over year to $50.4 million, although printer revenue fell 1.6% to $34.9 million. Twigg remains concerned about the lack of growth in printers, although he also noted that the Q4 decline was still an improvement from the 14% slide in Q2 and the 11% decline in Q3.

No guidance from 3D Systems

Twigg also pointed out that 3D Systems did not provide any guidance and also “avoided projections related to revenue growth or the market outlook.” However, he also called attention to the upcoming products slated for launch this year and noted that management was emphasizing that they expect double-digit growth in healthcare and unspecified growth in software and materials. They also look for 3D printer growth this year, although Twigg adds that their outlook still appears “murky.” He warned that problems with the company’s legacy products could continue to taint its reputation, and it’s unclear how well the upcoming products will do. The KeyBanc analyst maintained his Sector Weight rating with no price target on 3D Systems stock following the Q4 2017 earnings release.

3D Systems stock rose more than 10% in intraday trading on Thursday, climbing as high as $13.70 per share.