UPDATE: 3D Systems (DDD) PT Lowered to $7 at JPMorgan, Stays Underweight Citing 'Cautious Outlook and Depressed Margins and FCF'

November 9, 2022 3:43 PM EST
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Price: $10.22 --0%

Rating Summary:
    7 Buy, 18 Hold, 6 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 15 | Down: 7 | New: 20
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(Updated - November 9, 2022 3:44 PM EST)

JPMorgan analyst Paul J. Chung lowered the price target on 3D Systems (NYSE: DDD) to $7.00 (from $9.00) while maintaining a Underweight rating.

The analyst comments "DDD posted mixed 3Q22 results, beating on PF EPS on light revenues. Industrial was up high-single digits CC on Aerospace and defense markets demand partially offset by softness in Auto while Healthcare was impacted by lower discretionary spend, particularly from the dental market. FY22 revenue guidance was lowered at the midpoint, though PF opex was also lowered underscoring management focus on profitability. Visibility remains limited particularly from the dental market, and PF operating profit remains in negative territory for the 3rd consecutive quarter, while FCF burn has hit $70mm YTD. Management expects gross margins to grind higher as price increases take effect, freight and component costs dissipate, and in-sourcing manufacturing benefits flow through. That said, Opex remains on the upward trajectory in FY23 given several acquisitions done over past year that provide limited revenues, so we expect PF operating profit and FCF to remain challenged here short term. Bioprinting remains a key focus for the firm, and could pay off materially longer term, as the technology broadens appeal to healthcare investors, though limited positive contribution to the P&L today. Management tone was cautiously optimistic, and sees tough near-term outlook particularly in Dental, though mentioned the firm has flexibility on opex if top line remains pressured. We cut earnings estimates accordingly with which our price target goes to $7.00 (from $9). Maintain UW."

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