Merrill Lynch Talks Up 3D Printing After Euromold Conference

By Chris Lange Published Dec 1, 9:20AM EST

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The 2014 Euromold conference was held in Frankfurt last week, and Merrill Lynch took the opportunity to review two of the biggest firms in the 3D printing industry: 3D Systems Corp. (NYSE: DDD) and Stratasys Ltd. (NASDAQ: SSYS).

For 3D Systems, Merrill Lynch noted that the company has its focus on integrating various acquired assets and driving improved speed and larger build envelope with printers. The analyst firm sees additional low end products at Consumer Electronics Show (CES) 2015 in January.

Merrill Lynch maintained its Underperform rating as it continues to see organic growth remain subdued in the near term. The estimates for 3D Systems remain unchanged and the price objective stays at $40. The 2015 estimates remain at $0.96 in earnings per share and $862 million in revenue. Its stock has a consensus analyst price target of $46.10 and a 52-week trading range of $32.64 to $97.28. The market cap is nearly $4 billion.

One of the products 3D Systems displayed at the conference was:

The ProX 800 SLA printer (new printhead and smaller footprint), the ProX 500 Plus Selective Laser Sintering (SLS) printer and the ProX 400 direct metal printer specifically targets manufacturing of ready-to-use functional parts and complete assemblies for the aerospace, automotive, medical devices, fashion and mobile devices end markets.

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Merrill Lynch expects that in the near term Stratasys will have organic revenue growth of over 25%, driven by rapid prototyping, manufacturing of jigs, fixtures, direct digital manufacturing and strong growth at the consumer level. There is significant leverage in the model, but there is not expected to be a significant margin improvement in the near term.

A big takeaway from the conference was:

Stratasys highlighted that to succeed in 3D printing the roadmap is clear, and consists of three fundamentals — materials, hardware and ecosystem. On the materials side, the evolution in 3D should be to resemble end use parts and physical properties so as to give an exact look and feel. In hardware, the printers need to be production grade, faster and reliable; while the ecosystem needs to evolve to better design software, manufacturer collaboration, and professional services.

Merrill Lynch said that Stratasys expanded its lineup with new printers and materials, including six new triple jetting printers and two new Fortus printers. Stratasys is seeing growth in its Makerbot models and Connex3. In the opinion of Merrill Lynch, the company should introduce new technology platforms over the next two years.

The estimates remain unchanged for 2015 at $2.77 in earnings per share and $1.01 billion in revenue, and the price objective stays at $140. The stock has a consensus analyst price target of $133.71 and a 52-week trading range of $85.30 to $138.10. The market cap is $5 billion.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.