Gains in 3D Printing Stocks Tied to Positive Data Points, Says Goldman (DDD) (SSYS)
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In a research note Monday, analyst Samuel H. Eisner of Goldman Sachs commented on the rally in 3D printing stocks. In his view, gains are tied to tailwinds from order trends and potential new applications, optimism following a recent equity raise, and upbeat positioning into Q2. Interestingly, BofA recently said in a note that the rally was not driven by fundamentals.
"Through 1Q14, some 3DP OEs saw revenue and order weakness due to timing delays. While this led to yoy shipment declines, recent datapoints point to strength. ARCM and AM3D (both not covered) have exhibited solid order growth through 1H14. Should current growth rates hold for the full year, total shipments would finish +20% ahead of 2013 levels. Further, multiple recent news reports have indicated additional usage of 3D printing (i.e. bioprinting), which would be incremental to our $40bn TAM estimate," said Eisner.
"In late May, DDD raised nearly $300mn by issuing 5.95mn shares, and subsequently indicated at its analyst day its willingness to use the proceeds for potentially accretive M&A. Given DDD’s acquisitive record, we believe that other transactions may be likely. That said, given management’s comments, we believe transactions are likely to be more in the materials market rather than in the hardware side of the business," he added.
"Based on commentary throughout the quarter, we remain upbeat on the growth prospects for DDD and SSYS into 2Q given the following; (1) 1Q revenue beats for both companies, (2) new product introductions being well received at MakerBot (SSYS), and (3) integration/closings of previously announced service bureau transactions bolstering results," he said.
Shares of Stratasys Inc. closed at $116.20 yesterday.
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