Why 3D Systems Could Be Set to Explode

by Alyssa Oursler | August 27, 2013 11:24 am

3D Systems (DDD[1]) got a nice jolt yesterday on the back of some love from Wall Street.

DDD improved 7% Monday after Citi analyst Kenneth Wong initiated coverage on the stock[2] — and on sectormate Stratasys (SSYS[3]) — with “buy” ratings. Stratasys, for those who don’t know, recently bought Makerbot — a company which has been making headlines for its handheld 3D scanner[4] and distribution deal with Microsoft (MSFT[5]).

The new $60 price target for DDD represents 20% more upside after today’s pullback, which brought the stock’s 52-week gains to 80%. Meanwhile, the $125 price target on SSYS translates to 14% upside for a stock that has soared 70% in the same time frame.

Of course, the trouble with price targets is that they don’t give a specific time horizon. But based on Wong’s bullish comments on the 3D printing market as a whole, a particular time frame might not be necessary — the broader direction is up, up, up.

The most notable prediction Wong made was that the 3D printing market could triple during the next half-decade thanks to “much broader adoption across more upstream production applications and the consumer end market.”

Christopher Mims at Quartz[6] did note that such rapid growth projections must be taken with a grain of salt, considering the small size of the market. As of 2011, the industry was worth just $1.7 billion, while 3D-printed parts made up around half that.

Meanwhile, despite being a personal fan of the technology, InvestorPlace tech expert Brad Moon has been quick to point out the many obstacles consumer-level 3D printers face[7].

But there are plenty of tailwinds to offset those concerns. Mims explained a few, including the fact that key patents will expire next year, while the materials with which you can 3D print continue to multiply.

The bottom line: If Wong’s right about just how much growth is on tap in the next few years, 3D Systems — and even companies he didn’t mention, such as ExOne (XONE[8]) — might rocket even higher than he has predicted.

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.

Endnotes:
  1. DDD: http://studio-5.financialcontent.com/investplace/quote?Symbol=DDD
  2. initiated coverage on the stock: http://www.marketwatch.com/story/3d-printing-stocks-jump-on-bullish-citi-note-2013-08-26?mod=wsj_share_tweet
  3. SSYS: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSYS
  4. handheld 3D scanner: http://investorplace.com/2013/08/could-makerbot-bring-3d-printing-mainstream/
  5. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  6. Christopher Mims at Quartz: http://qz.com/118678/why-the-market-for-3d-printing-will-triple-in-five-years/
  7. many obstacles consumer-level 3D printers face: http://investorplace.com/2013/07/now-is-not-the-time-to-invest-in-3d-printing/
  8. XONE: http://studio-5.financialcontent.com/investplace/quote?Symbol=XONE

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