Credit Suisse has a new rating game in the 3D printing sector. These are listed as downgrades and upgrades but, after looking at the reports, they appear to be a transition of ratings to the firm’s Julian Mitchell.
Stratasys Ltd. (NASDAQ: SSYS) is being assumed with an Outperform rating, versus a prior Neutral rating, and with a $144 price target (versus a $120.68 close). The report said:
We believe the Stratasys 2014 sales guidance of $660 to $680 million is potentially conservative in light of likely MakerBot outgrowth in the second half of 2014, when NPIs roll out. Its MakerBot is strongly positioned in both the pro-sumer and consumer markets with premium brand, print quality, ease of use, and high sales exposure (21%).
3D Systems Corp. (NYSE: DDD) was transitioned — downgraded — to Neutral from Outperform with a $90 price target. The report said:
3D Systems is likely to issue guidance for 2014 in the next month; we believe there is risk that earnings guidance disappoints consensus expectations given heightened R&D costs from the Xerox transaction and incremental sales and marketing expense.
The bottom line here is that Credit Suisse now sees what it calls the pro-sumer, consumer and education-type end markets growing to a $800 million annual revenue opportunity by 2016. The firm’s prior target was $175 million.
Julian Mitchell also noted a recent valuation divergence between Stratasys and 3D Systems, while having a more constructive view of the pro-sumer and consumer 3D printing markets.
ExOne Co. (NASDAQ: XONE) was reiterated as Underperform at Credit Suisse as a part of the call. This was cited due to its lowered guidance in the previous week.
This value divergence is also being met with a share reaction divergence that is the same direction as the calls. Stratasys shares are indicated up 2% at $123.00 and 3D Systems’ shares are indicated down more than 2% at $88.25.
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