3D Systems Makes a Trifecta in 3D Printing Lower Guidance

The company’s previously raised revenue guidance was $500 million to $530 million, based on more than 30% organic revenue growth and more than 50% total revenue growth for the fourth quarter of 2013. 3D Systems’ adjusted earnings are being put in a range of $0.83 to $0.87 per share. This is versus prior guidance of $0.93 to $1.03 per share, and compares to expectations of $0.96 per share.

3D Systems said that it saw much stronger professional 3D printers and materials demand, versus softer on-demand parts and consumer demand during the fourth quarter. The company now expects to report that its December backlog nearly doubled sequentially to $28 million, including multiple advanced manufacturing 3D printer orders that it plans to deliver over the next year.

Another note in the guidance is that its gross profit margin remained materially unchanged, as well as the note that its adjusted earnings per share “compressed as a result of a substantial increase to its R&D expenditure related to its accelerated new product developments, a step up in sales and marketing expenses related to its rapid products channel expansion and higher costs related to its acquisition concentration during the quarter.”

The company plans to report final fourth-quarter and full-year 2013 results on February 28, 2014.

3D Systems puts 2014 revenues in a range of $680 million to $720 million, with adjusted earnings per share of $0.73 to $0.85. Thomson Reuters has estimates of $1.27 in earnings and $671.3 million in revenue.

The sell-off has already been hard on 3D Systems, taking shares down to $75.76 before the warning. The 52-week high is $97.28, and the stock’s early trading indication Wednesday was down around 16% at $63.00, and it was down more than 24% shortly after the opening bell to $57.01.

Rival Stratasys Ltd. (NASDAQ: SSYS) was already down at $118.03 after a 52-week high of $138.10. It had previously warned on its own, but 3D Systems is the sector leader. Stratasys shares are down more than 8% to $107 in sympathy.

3D Systems’ lower guidance is a blow. The company claims that it will continue to invest at the expense of margins to build on its long-term opportunities. The problem is that the excessive valuations and share price gains had these priced for perfection. Now you know that the easy money gains have been made.

Keep in mind that 3D Systems was worth $7.8 billion and Stratasys was worth $5.75 billion prior to this morning’s earnings warning. Analysts will have to pull back soon on their bullish price targets, whether the market selling continues or not.