3D Systems Corporation (NYSE:DDD) shares have declined 46% this year so far. But the 3D printing company’s growth prospects remain strong, says Imperial Capital analyst Ashok Kumar. Imperial Capital has initiated coverage of 3D Systems with $60 price target and Outperform rating on the stock. The 12-month price target reflects about 17% upside from Thursday’s closing price of $49.64. The Rock Hill, South Carolina-based company controls about 25% of the global 3D printing industry, according to IDC.
3D Systems utilizes indirect channels to reach the market
Earlier this week, 3D Systems Corporation (NYSE:DDD) reported first quarter revenues of $147.8 million, up 45% YoY. While 28% of the revenue growth was organic, the remaining came from recent acquisitions. Overall, printers business grew 53%, print materials unit rose 41%, while revenues from services were up 38%. Earnings of 15 cents a shares were in line with the Wall Street consensus. The company management reiterates its full-year revenue guidance of $680-$720 million with non-GAAP EPS of 73-85 cents.
Imperial Capital said that 3D Systems Corporation (NYSE:DDD)’s portfolio of 3D printers is targeted at personal, professional as well as production environments. The company utilizes indirect channels to reach the market. 3D Systems has formed several new partnerships in the past two years to expand its reach, including the recent partnership with Staples, Inc. (NASDAQ:SPLS). However, Ashok Kumar says that increased investments in products and distribution may hurt the company’s near-term earnings growth. Though long-term opportunity remains solid, short-term investor concerns are due to the impact of these investments on earnings growth.
3D Systems launched 40 new products last year
Besides organic growth, 3D Systems Corporation (NYSE:DDD) has been aggressively acquiring companies to explore new avenues. Between 2011 and 2013, the company purchased 32 businesses. The acquisitions have helped 3D Systems bring new products to the market. Imperial Capital believes that the company is well-positioned to grow faster than the 3D printing industry. Last year, the company introduced about 40 new products spanning software, printers, scanners and materials.
At the end of 2013, 3D Systems Corporation (NYSE:DDD) held 973 patents worldwide. The company also had 204 pending patent applications in various countries. The patents will expire at varying times through 2027. 3D Systems has also signed licensing or cross-licensing deals with several companies to enable them to utilize its technologies in their products and vice-versa.
3D Systems Corporation (NYSE:DDD) shares skidded 3.99% to $47.66 at 9:51 AM EDT on Friday.
