Why Goldman Sachs Sees Over 35% Upside in This 3D Printer Stock

Technology

Published: December 21, 2021 10:23 am

Last Updated: December 23, 2021 10:44 am

Markforged Holding Corp. (NYSE: MKFG) may be one of the lesser known investments in Cathie Wood’s ARK Invest portfolio, but one prominent analyst is eyeing it for some big gains on the horizon. Goldman Sachs recently released a call for the 3D printer manufacturer looking for significant upside.
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ARK Invest holds this stock in two separate funds. ARK Autonomous ETF (NYSEARCA: ARKQ) has 9,522,101 shares, valued at roughly $65.7 million, as of December 21. ARK Space ETF (NYSEARCA: ARKX) has 1,800,502 shares, valued at $8.6 million. Cumulatively, ARK Invest holds 11,333,603 shares, which are worth a total of $74.3 million.

Goldman Sachs recently initiated coverage of Markforged with a Buy rating and a $6.50 price target. That implies upside of 35.7% from the most recent closing price of $4.79 per share.

In the report, Goldman Sachs detailed:

We note that the company’s proprietary CFR technology enables it to supply 10x stronger materials with a 2x-3x higher cost to mission critical industries. This ability means Markforged is used much more for productions parts than peers who are mainly used for prototyping. We are also positive on the company’s AI based software offering which provides continuous updates to optimize the existing fleet of printers for customers. We believe that investor expectations around 3D printing have moderated meaningfully after guide downs by peers and that this presents an attractive risk reward opportunity at current stock levels. Even though we are modeling below the company’s published forecasts we believe investors are likely now assuming a bearish scenario for the launch of a key new product, the FX20. In our own model we take a conservative approach and still believe there is material upside to MKFG stock.

So, the highly anticipated FX20 printer is expected to start shipping in 2022 and is forecast to triple existing sales by 2024, according to management. However, Goldman Sachs believes it is too early to predict the trajectory of FX20 sales. Also, based on conversations with Markforged customers and distributors, the investment house believes the company is seeing strong initial customer interest for the FX20.

It is worth noting here that Markforged has a prestigious list of customers that span major industries, including Tesla, Porsche, NASA, Lockheed Martin, the U.S. Air Force, Regeneron and Medtronic.

Overall, the company offers an interesting risk-reward at this point. Also, with the backing of ARK Invest, investors might breathe easier. On the other hand, an increasingly competitive 3D printing industry could see some headwinds, and the adoption of the FX20 is yet to be seen.

Shares of Markforged traded up about 5% to $5.05 on Tuesday, in a 52-week range of $4.72 to $15.10. The consensus price target is $11.83.