Stratasy (SSYS), 3D Systems (DDD) Price Targets Lifted at FBR Following CES Takeaways; SSYS Named 'Top Pick'

January 10, 2014 7:38 AM EST Send to a Friend
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Price: $102.42 +0.46%

Rating Summary:
    20 Buy, 6 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 18 | New: 41
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FBR Capital analyst Ajay Kejriwal boosted his price target on Stratasys Inc. (NASDAQ: SSYS) from $155 to $165 and added the stock to his Top Picks List given positive takeaways from CES. The analyst also lifted his price target on Outperform-rated 3D Systems (NYSE: DDD) from $85 to $98.

Key takeaways from meetings with 3D ecosystem executives and several resellers at CES:

  • an impressive array of new product launches from several companies, including Stratasys and 3D Systems with advanced feature sets that should help drive increased penetration of 3D printing in the "Prosumer" market.

  • New launches from Stratasys (Makerbot) include the Replicator Z18, which in our view provides one of the best price/performance in its category and could be a nice source of revenue upside. The new Makerbot digital studio also rounds out the company's offering in the 3D ecosystem and should help cement the company's dominance of the prosumer market.

  • As expected, 3D Systems unveiled several new products, including an attractively priced Haptic device and a sub-$1000 printer for the consumer market. Launch of these multiple new products in the last several weeks should help drive channel-related sales in the next couple quarters, in our view.

  • A key surprise to us was the large number of private companies showcasing what appeared to be attractively priced and viable printers. This included companies with considerable intellectual property (Envisiontec and DWS) and start-ups with relatively decent-quality clone products (Kevvox, XYZ printing, Formlabs, and Robox). We do not view the lower-priced clones as a near-term threat to the established players but rather see them helping drive adoption of 3D printing and a significant uptick in demand for entry-level printers.

  • With respect to near-term trends, our discussions with resellers suggest strong demand and offtake in 4Q, especially for jewelry, dental, and medical applications. Prototyping demand from industrial customers also remains strong.

    On SSYS, the firm sees likely upside from Makerbot; addition of newer technologies and entry into metal. "We see upside in shares from (a) traction in recently launched products from Makerbot, where the company is emerging as the dominant player in the fast growing prosumer market; (b) additional revenue synergies from the Object merger and increasing demand for production printers; and (c) likely addition to the portfolio of technologies and materials, including metal, through organic initiatives and M&A. Valuation remains at a discount relative to the group and any M&A announcement could be a catalyst.

    On DDD, the analyst comments: "We see upside in shares from (a) traction in recently launched products from Makerbot, where the company is emerging as the dominant player in the fast growing prosumer market; (b) additional revenue synergies from the Object merger and increasing demand for production printers; and (c) likely addition to the portfolio of technologies and materials, including metal, through organic initiatives and M&A. Valuation remains at a discount relative to the group and any M&A announcement could be a catalyst.

    For an analyst ratings summary and ratings history on Stratasys Inc. click here. For more ratings news on Stratasys Inc. click here.

    Shares of Stratasys Inc. closed at $133.25 yesterday.


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