3D Systems Corporation (DDD) Gets $63 Price Target After Robtec Buy

Updated on

3D Systems Corporation (NYSE:DDD) saw its stock jump by more than 2% on today’s market after the company announced a deal to acquire South American 3D printing distributor Robtec. The deal will see 3D Systems take more control of its distribution channels, giving it more options for product rollout going forward.

The 3D Systems Corporation (NYSE:DDD) deal comes on the back of a similar move by chief rival Stratasys, Ltd. (NASDAQ:SSYS). That company purchased two service bureaus earlier this month, and it appears to have marked a trend in the 3D Printing industry. Integration is likely to be one of the key themes of the industry going forward, and 3D Systems, along with Stratasys, are going to be ahead of the rest in the area.

Goldman Sachs remains Neutral on 3D systems

A report from Goldman Sachs Group Inc. (NYSE:GS) on the acquisition is positive about its implications, but the analyst sees little reason to change his outlook for the company on that basis. Samuel H. Eisner, who authored the report for the investment bank, maintained a Neutral rating on the company and a put a price target of $63 per share. On today’s market the company’s stock is trading at around $8.50 per share.

Eisner said the move should “allow for a greater degree of channel control for OE’s. While service bureaus are likely slower-growing acquisitions relative to platform acquisitions, we are positive on customer wallet-share gains provided by bureau acquisitions.” 3D printing has been an up-and-coming industry for some years, but high valuations and difficult business models make the firm’s stock a risky bet.

3D printing stock volatile as HP announces entry

Stock in both Stratasys, Ltd. (NASDAQ:SSYS) and 3D Systems Corporation (NYSE:DDD) has suffered so far in 2014. 3D Systems’ stock has lost close to half of its value since the start of the year, while Stratasys lost about a quarter of its value in the opening months of 2014. The impetus behind the shakeup in the stocks is multifaceted, but two forces stand out. Hewlett-Packard Company (NYSE:HPQ) is getting into 3D printing, and the stock market isn’t what it was in 2013.

Stocks with high valuations have lost a significant amount of their value in the first few months of 2014 as money appeared to flow out of the market. The causes behind that trend are complex, but the result for companies like 3D Systems Corporation (NYSE:DDD) is simple. A huge amount of shareholder value has been lost, and there’s little wonder why. The company is currently trading at more than 100 times earnings, and that’s after the losses of the early part of the year.

Hewlett-Packard Company (NYSE:HPQ) interest in the business is an added negative for stock in 3D Systems Corporation (NYSE:DDD). Nobody is sure how big the market will eventually be, and the brand name and enterprise experience that Hewlett-Packard brings with it, 3D systems may have problems competing. That leaves shareholders nervous about the company’s future.

Leave a Comment

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!