Buy 3D Systems (DDD) and Stratasys (SSYS) on ExOne (XONE)-Linked Weakness - Canaccord Genuity

May 15, 2013 9:13 AM EDT
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Price: $10.14 -0.39%

Rating Summary:
    4 Buy, 7 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 22 | Down: 34 | New: 34
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Canaccord Genuity analysts Bobby Burleson expects Buy-rated 3D Systems (NYSE: DDD) and Stratasys (NASDAQ: SSYS) to see pressure today on the heels of below-consensus results and guidance by ExOne (NASDAQ: XONE) last night. Burleson said investors should use this weakness as a buying opportunity.

"Strong share appreciation over the past month for DDD (up 47%) and SSYS (up 22%), coupled with cautious commentary from XONE on European demand, is likely to lead to some profit taking for the group, although we believe investors with a long-term view should use weakness as a buying opportunity for DDD and SSYS," Burleson comments.

The analyst notes that XONE's machines are at higher-end price points ($800K to $1.5M) and are capital goods focused, whereas DDD and SSYS are less lumpy with highly diversified price points and end-uses (R&D, prototyping, DDM, healthcare), and they ship hundreds of units per quarter.

"In the near term, we believe DDD could outperform SSYS given the looming expiration of a lock-up for SSYS's former Objet shareholders of roughly 10 million shares (expires June 3)," he said.

XONE is 10% down early, whereas DDD and SSYS are both down about 1%.

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