3D (DDD) CEO Departure May Have a Silver Lining

Shares of 3D Systems (NYSE: DDD) are trading off 6% after the company announced that long-time CEO Avi Reichental has resigned. The company is currently looking for a successor while an executive committee will oversee the day-to-day operations.

While noting that Wall Street estimates for this year and next will likely be moving lower, Needham & Company analyst James Ricchiuti believes the management change is likely to lead to a fresh look at DDD's strategic direction. This is seen as a positive.

Interestingly, Ricchiuti notes that during Reichental's 12-year tenure at DDD the stock is up approximately 330% versus a 230% return for the Nasdaq. However, the fall from grace over the last year cannot be overstated. Shares are down approximately 90% from the peak in late 2013-early 2014.

The analyst notes Reichental has been a lightening rod for those who questioned DDD's acquisition strategy and pursuit of new markets, including consumer 3D printing. "Some of these initiatives have been highly successful such as the growth of DDD's formidable medical business, which currently represents around 20% of total revenues and has registered a 55% CAGR since 2010 and was up 30% through the first six months of 2015," he commented. "Other initiatives such as consumer and metals have fallen well short of expectations."

Overall, however, the change could be good for DDD and investors, the analyst said, "... as it will spur a fresh look at the company's portfolio of businesses and strategic direction"

Needham & Company reiterated a Buy rating and price target of $17 on DDD.

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 $10.85 yesterday.

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