3D Printing Services Seen as Overly Expensive, Analyst Expects Pricing Pressure (DDD) (SSYS) (PRLB)

Pacific Crest thinks investors should continued to avoid 3D Systems (NYSE: DDD). Comments follow a 3D printing services price investigation that showed it was least competitive in tests. Proto Labs (NYSE: PRLB), and Stratasys (NASDAQ: SSYS) were also mentioned in the report. Overall 3D printing services were described as overly expensive, and analysts sees pricing pressure as competition grows.

Analyst Weston Twigg explained, "We attempted to compare 3D printing services offerings between 3D Hubs, 3D Systems, Proto Labs, Shapeways, Stratasys, and Xometry, evaluating price, quality, ease of use, and turnaround time. Our initial test was abandoned due to very high costs; we followed up with more price investigation, and in every case, high pricing showed that 3D printing remains a very specialized market. For example, we sent an entire chess set to each provider (32 pieces) for quotes using SLS, SL, and FDM processes; 3D Hubs offered the best price ($300 for an ABS material chess set), while 3D Systems offered the worst price ($4,152, also for an ABS material set)."

The analyst continued, "3D Systems has had execution problems, but its services business has been healthy. However, if our test is any indication, the company may soon need to lower its service prices and margins meaningfully."

On Stratasys, Twigg said, "In our investigation, Stratasys was generally priced in the middle, but below 3D Systems. Expect moderate price and margin pressure with the potential to grab share from 3D Systems. Model disruption remains a major concern, but SSYS should benefit as printer demand recovers."

Twigg noted that Proto Labs services were user-friendly but expensive. "Proto Labs struggled to be price competitive in low-volume tests, but pricing improved with volume. Expect 3D printing services to weigh on gross margin as revenue expands. We see moderate downside to the stock from here."

For an analyst ratings summary and ratings history on 3D Systems click here. For more ratings news on 3D Systems click here.

Shares of 3D Systems closed at $13.03 yesterday.

You May Also Be Interested In

• CFRA Upgrades Alstom SA (ALO:FP) (ALSMY) to Hold
• Berenberg Downgrades Learning Technologies Group (LTG:LN) (LTTHF) to Hold
• Jefferies Upgrades Reckitt Benckiser (RKT:LN) (RBGLY) to Hold