3D Systems Corporation (DDD): Investor Focus Shifts To Execution

Updated on

3D Systems Corporation (NYSE:DDD) is set to announce its Q1 results on Tuesday, April 29 before the bell. Wall Street isn’t too optimistic about its earnings. Over the past 90 days, the consensus earnings estimate has declined from 26 cents to 15 cents. JPMorgan analysts Paul Coster, Mark Strouse and Paul J Chung said in a research note that they expect the company to report 13 cents in earnings and $143.2 million in revenues. JPMorgan has a Neutral rating on the stock with a $54 per share price target.

3D Systems likely to reiterate its full-year guidance

The research firm says 3D Systems Corporation (NYSE:DDD) will likely generate $52.9 million  revenues from its Printer/Software business, $38.9 million from its Materials unit and $51.4 million will come from its Services business. JPMorgan expects the Rock Hill-based company’s operating margins to plunge by 10 percentage points to 15.3%.

For the full year 2014, Coster expects 3D Systems Corporation (NYSE:DDD) to reiterate its guidance of $680 million to $720 million in sales and 72 cents to 85 cents in earnings per share. JPMorgan forecasts FY2014 revenues of $685.9 million and earnings of 85 cents per share. The 3D printing company expects its revenues to surpass $1 billion by 2015. The research firm forecasts the 3D printing industry to grow at a 25% annual rate through 2015 and 20% GAGR between 2015 and 2020.

3D Systems has to navigate multiple challenges

3D Systems Corporation (NYSE:DDD) shares have declined more than 44% this year so far. The decline was driven by the unexpected reset of short-term margin expectations and the broad sell-off in momentum stocks. 3D Systems has rolled up much of the 3D printing industry and exploited acquired growth opportunities. The company has acquired more than a dozen businesses in the past few months.

3D Systems

Now investor focus has shifted to whether 3D Systems Corporation (NYSE:DDD) can integrate so many acquisitions to form a coherent scalable platform. Investors are also concerned about how the company can launch several new growth initiatives in newly identified markets without affecting operating margins and without a mishap. JPMorgan says the biggest areas of concern include a mix-shift to high-margin consumables, payback on the Cubify initiative, and investment impact on operating expenses.

3D Systems Corporation (NYSE:DDD) operates in a segment where sales are sensitive to the economic cycle. For example, the company’s printer sales plunged 29% in 2008 and 26% in 2009 as new product development teams in aerospace, auto and consumer products cut spending. 3D Systems shares fell 1.17% to $50.84 at 10:19 AM EDT on Friday.

Leave a Comment