Can 3D Systems Corporation (DDD) Stock Keep Up Its Go-Go 2017?

The bullish case for 3D printing companies is hard to ignore. In the past half year, companies such as Stratasys Ltd. (NASDAQ:SSYS) and 3D Systems Corporation (NYSE:DDD) are up by leaps and bounds.

3D Systems reports earnings on May 3, and analysts on average expect the company to report earnings of 11 cents per share on revenues of $156.28 million. There’s a bit of a range there — analysts are looking from anywhere between 8 and 14 cents per share in profits, and revenues between $149 million to $161.7 million.

Last quarter, DDD managed to top the earnings consensus mark, but missed on sales. It posted 15 cents per share in profits on revenues of $165.9 million.

DDD, which benefited from better demand from industrial customers, as well as strong software sales and services in healthcare, generated $18.7 million in cash from operations. It also cut SG&A expenses by 13%, and may have followed with a bigger cut in Q1.

But it wasn’t completely peachy. Headwinds in the 3D printing business will likely persist, however. 3D Systems forecast revenue growing just 2%-8% for the full-year 2017, after watching it decline 9.5% year-over-year in the previous quarter. And the company’s mix of software sales, while improved, were too small to offset weak professional printer and on-demand services revenue.

Sentiment on DDD Stock

One bit of concern from the analyst community: Piper Jaffray upgraded Stratasys on April 18, but kept its rating of DDD at underweight, citing system demand issues.

3D Systems looks to be working to counter that, however. On April 13, the company lowered the price of the ProX SLS 500 3D Printing system. The new price should help entice customers to adopt a solution from 3D Systems and expand its market share. 3D printing opportunities are endless, but the hardware is price-sensitive.

The market recognizes the potential for Stratasys and 3D Systems as the dominant players. Their size gives them an advantage in scaling the business. They have the resources to win over midsize customers. Conversely, small-cap companies like ExOne Co (NASDAQ:XONE) and Voxeljet AG (ADR) (NYSE:VJET) don’t have the resources to compete.

That said, the market seems to favor SSYS at the moment. Bears are loading into DDD stock, with some 23% of the stock sold short as of the most recent data. SSYS shorts account for just 11% of the float.

Bottom Line

One thing to monitor going forward is the field of organ printing, where DDD might flourish.

On April 26, the company teamed up with United Therapeutics Corporation (NASDAQ:UTHR) to manufacture 3D-printed organs. This field is promising because the body is less likely to reject a foreign object that uses a patient’s own cells for printing.

If the partnership is successful, the pair might consider snapping up Organovo Holdings Inc (NASDAQ:ONVO) a $300 million 3D-printing firm that specializes in this market.

3D Systems still isn’t the nonstop growth dynamo investors hoped it would be when shares rocketed toward triple digits a couple years ago, but the narrative is at least picking up momentum, and 3D printing increasingly looks like a viable industry, even if growth isn’t explosive.

DDD stock still needs to show progress to keep advancing, however. Dreamy-eyed hopes for a 3D-printing heavy future aren’t enough to drive shares anymore. So the outlook is typical for most companies at this point — a beat should keep the story rolling, while a miss will likely cause a setback in this rally.

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

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