Why Stratasys Stock Is Getting Hammered Tuesday

Stratasys Ltd. (NASDAQ: SSYS) reported third-quarter 2016 results Tuesday before markets opened. The 3D printer maker posted adjusted earnings per share (EPS) of zero on revenues of $157.2 million. In the second quarter of 2015, the company reported earnings per share (EPS) of $0.01 and revenues of $167.6 million. Analysts had consensus estimates for EPS of $0.05 and revenues of $174.54 million.

Needless to say, shares are taking something of a beating based on these numbers. Worse, though, is Stratasys’s guidance for the full 2016 fiscal year.

Stratasys now expects revenues in the range of $662 to $673 million, compared with the consensus estimate of $701.47 million. Adjusted EPS is expected to fall in a range of $0.13 to $0.21, well short of the consensus estimate of $0.32.

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Adjusted earnings guidance excludes $59 million of projected amortization of intangible assets; $21 million of share-based compensation expense; $10 to $11 million in merger and acquisition related expense; and $7 to $8 million in reorganization and other related costs; and includes $15 million in tax expenses related to non-GAAP adjustments.

CEO Ilan Levin said:

The introductions of the Stratasys Infinite-Build and Robotic Composite 3D Demonstrators both evidence the unique long-term value of our core technologies and highlight the importance of strategic relationships in developing solutions that target specific, high-value added applications. … We were pleased to recognize additional improvements to our operational efficiency during the period which was reflected in a reduction in non-GAAP operating expenses and increase in our non-GAAP gross margin compared to the same period last year. We will continue to seek further improvements in our cost structure as we strive to align our operations even more closely with our anticipated results.

For the fourth quarter, analysts expect EPS of $0.14 and revenues of $188.47 million. That number almost surely will be adjusted downward after today’s weak report.

Shares of Stratasys traded down about 8% at $18.85 in Tuesday’s premarket session. The stock’s 52-week range is $14.48 to $30.46, and the consensus 12-month price target is $22.93.

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