The firm said it lowered its rating and removed its $38 price target on the 3D printing company based on its believe that 3D Systems still has a number of operating issues to address.
"This may seem poorly timed given an already epic collapse in its EPS and stock. Maybe it will prove to be. Still, short term strides have been eclipsed by a litany of fresh issues, its own actions around guidance and its CFO departure are troubling, it is possible that by the time it straightens out its current issues the competitive environment is less favorable, and it is no longer a relative value in the 3D space. We simply see more opportunity elsewhere," the firm said in an analyst note.
Shares of 3D Systems are up by 1.40% to $22.40 at the start of trading on Thursday morning.
Separately, TheStreet Ratings team rates 3D SYSTEMS CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate 3D SYSTEMS CORP (DDD) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 370.3% when compared to the same quarter one year ago, falling from $4.88 million to -$13.18 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Computers & Peripherals industry and the overall market, 3D SYSTEMS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$0.94 million or 404.22% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 340.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- 3D SYSTEMS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, 3D SYSTEMS CORP reported lower earnings of $0.11 versus $0.44 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus $0.11).
- You can view the full analysis from the report here: DDD Ratings Report