UBS Sees Positive Outlook for Stratasys, Ltd

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The 3D printing industry is a relative new industry that has really taken off over the past couple of years.  The new technology is certainly manufacturing of the future and is incredible, considering the capabilities and what these printers can do.  Stocks in the 3D printing industry such as Stratasys, Ltd. (NASDAQ:SSYS) and 3D Systems Corporation (NYSE:DDD) late 2012 and through 2013 were subject to a lot of investment action and as a result, prices skyrocketed.  However, most of these companies in the 3D printing space have either barely entered profitability or are not profitable, due to the fact that the technology is still relatively new and prices are still high for consumers and enterprises to venture into.  That being said, there appears to be some members of the industry that are pulling ahead of the pack. UBS AG (NYSE:UBS) released yesterday a bullish breakdown of Stratasys.

Stratasys focusing its business on enterprise customers

UBS says that Stratasys, Ltd. (NASDAQ:SSYS) has committed to focusing its business on enterprise customers, hoping to make an entrance and emergence as a manufacturing force.  UBS says they are impressed with Stratasys’s enterprise consulting services, being that it makes the transition and understanding of how the machines work faster and quickly.  Additionally, they have developed partnerships with Adobe Systems Incorporates (NASDAQ:ADBE) and PTC Inc (NASDAQ:PTC) to help create more support options and capabilities in the machines for customer ease.  UBS says that “we think Stratasys’ push into jigs and fixtures will be a door opener and take 3D printing beyond prototyping”.

Additionally, Stratasys, Ltd. (NASDAQ:SSYS) has upgraded its ULTEM systems, which has seen rising demand, due to rising demand for end-use parts.  The company’s MakerBot corrected the early issues customers were experiencing with extruder quality, to further build on its lead and reputation in the industry.  The company just recently began selling its MakerBot through, Inc. (NASDAQ:AMZN), and also retails the machine to Fry’s Electronics, Staples, Inc. (NASDAQ:SPLS), Dell Computers, and Home Depot Inc (NYSE:HD).

Stratasys valuation

Overall, UBS rates Stratasys, Ltd. (NASDAQ:SSYS) a “buy” and gives the stock a full year price target of $125, the stock is currently trading at $104.77 representing a potential 20% gain in the stock.  With patents expiring in the 3D industry soon, UBS sees this as a lowered barrier for Stratasys to gain further share.  However, they do acknowledge the fact that new printing companies entering the market could cause Stratasys to see a slower growth trend.  Being that Hewlett-Packard Company (NYSE:HPQ) is preparing the enter the 3D printing market and specifically target enterprise customers, I think HP will take a significant amount of share away from Stratasys and the other companies as well.  Overall, UBS may be bullish on Stratasys, but I have a hard time backing that when I know that a much bigger, more well-known, better capitalized player is entering the market.  Stratasys may be a good “buy” now according to the bank, but I think it would be wiser to wait and see HP’s entry into the market and wait and see the response.

Disclosure: No positions

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