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Why 3D Printer Stocks Slumped

The slump in shares of 3D Systems (DDD) erased the monthly gains made for investors. In the last few days, 3D Systems lost over 15% of its value. By comparison, Stratasys Inc. (SSYS) shares fell by under 5%:

Unrelated but relevant negative sentiment led by the fiscal cliff, weakness in China, and a recession in Europe could be to blame. For 3D printing, there is skepticism. CNET wondered if 3D printing is in a bubble.

Valuation Analysis

The valuation of 3D printing was questioned last month. In that article, another sector to illustrate what happens to expensive stock. 3D Systems trades with a POP of 28. Stratasys trades with an even higher POP of 44. For now, investors believe that the growth rates for Stratasys are sustainable. This is illustrated by the sustained, high valuation. Stratasys received an upgrade from Piper, an investment firm, who cited strong secular growth in the 3D printing market.

Dassault Systemes SA (DASTY), whose shares peaked at $110 recently, has a POP of 24.

Analysis and Comments

3D printing has a wide-range of appeal. Even in the entertainment industry, the technology is used to help in productions. Voxeljet 3D printer was used to create an Aston Martin stunt double for the movie, Skyfall.

Ongoing, albeit uneven, growth in 3D printing bodes well for software companies too. Autodesk (ADSK) shares are range-bound, as it cycled between $30 and $35 since mid-April, 2012:

In its recent quarter, Autodesk reported earnings of $0.28 per share. Revenue declined for licensing, but increased for maintenance. Autodesk forecasts revenue to be in the range of between $570 million and $600 million, or $0.43 and $0.51 per share (non-GAAP). For fiscal 2013, earnings are expected to be $1.84 to $1.92 per share (non-GAAP).

Business Section: Investing Ideas

Companies in the 3D sector include:



1. 3D Systems Corp. (DDD, Earnings, Analysts, Financials): Engages in the design, development, manufacture, marketing, and servicing of 3D printers and related products, print materials, and services. Market cap at $2.35B, most recent closing price at $41.26. 3D Systems said recently it was holding a conference call to fact-check an article to fact-check and to clarify a negative article published about the company.

 

2. Stratasys Inc. (SSYS, Earnings, Analysts, Financials): Engages in the development, manufacture, and marketing of three dimensional (3D) printing, rapid prototyping (RP), and direct digital manufacturing (DDM) systems primarily in North America, Europe, and the Asia Pacific. Market cap at $1.45B, most recent closing price at $66.54.

 

3. Dassault Systemes SA (DASTY, Earnings, Analysts, Financials): Provides 3D and product lifecycle management solutions worldwide. The company offers SolidWorks software that provides 3D solutions for product design, analysis, and data management.

 

4. Autodesk, Inc. (ADSK, Earnings, Analysts, Financials): Provides design software and service solutions to customers in architecture, engineering, and construction; manufacturing; and digital media and entertainment industries. Market cap at $7.B, most recent closing price at $30.87

 

 


Written by Kapitall’s Chris Lau
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*Article image of 3D printed toys purchased at MakerBot’s new retail store in New York City.

 

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