NEW YORK (TheStreet) 3D Systems (DDD) shares were plunging in Wednesday trading, falling 15.6% to $63.96 after the 3D printing company announced full year revenue would be below guidance, and fourth-quarter earnings would be below forecasts.
The company pre-announced earnings of between 83 cents and 87 cents a share in the fourth quarter of fiscal 2013, down from a previous guidance of 93 cents to $1.03 a share. The company said it saw strong professional 3D printer and materials demand, but that was offset by softer demand for on-demand parts and consumer devices in the quarter.
3D Systems now expects to earn between 73 cents and 85 cents a share and revenue of between $680 million and $720 million for fiscal 2014. Analysts surveyed by Thomson Reuters expects earnings of $1.27 a share and revenue of $671.3 million for 2014.
"Consistent with our previous comments, during the fourth quarter we made very significant R&D, manufacturing and marketing investments designed to accelerate revenue growth that resulted in substantially compressed earnings for the fourth quarter," said Avi Reichental, President and Chief Executive Officer, 3DS in the release. "As we previously stated, we are willing to tolerate earnings reduction and even slight gross profit margin compression during this period to substantially accelerate our growth rate and market share. We firmly believe that these accelerated investments that already resulted in the announcement of 24 new products over the past nine weeks position the company to double its revenue over the next couple of years on organic growth of at least 30% going forward and to achieve greater earnings power and profitability over the long term."
Following the announcement, several analysts on Wall Street came to the defense of 3D Systems, noting the company was investing in the future, and investors should not be concerned with profitability right now. Here's what a few of them had to say.
Jefferies analyst Peter Misek (Buy, $102 PT)
"DDD pre-announced Q4 results with revs inline (~$155M, Jef/St $156M) but EPS $0.17-$0.21 (Jef $0.31, St $0.30) as professional was strong but services and consumer weak, underscoring our belief that prototyping is the near-term growth area, but the consumer opportunity will be more difficult to realize. 2014 guidance of revs +36% (organic >30%) but light EPS highlights a sizable ramp but also the decision to invest for the next decade of growth."