3-D Printing Prospects Keep Interest In Stratasys Alive (SSYS)

Following the fiscal 2012 third-quarter results reported a week ago, the share price of three-dimensional printer manufacturer Stratasys (NASDAQ: SSYS) continued to consolidate at around $65.00 yesterday. While reporting the third-quarter results, the company issued guidance for the full year 2012. Analysts Piper Jaffray upgraded the stock with a target price of $76.00. However, the high valuations demand more growth in the bottom line, says a “Motley Fool” report.

The Minnesota-based Stratasys is involved in the manufacture of three-dimensional (3D) printers, rapid prototyping (RP) systems and related consumable materials for office-based RP and direct digital manufacturing (DDM) markets. The company’s products are used by organizations in aerospace, architecture, electronics, jewelry, heavy equipment and automotive business.

The share price of Stratasys, which was trading in the range of $35.00 to $40.00 from January to March 2012, soared when the company announced a merger agreement with Israel’s 3-D printer manufacturer Objet Ltd. The share price consolidated at around $50.00 after hitting a high of $54.49 on May 23. In mid-July, the share price had a break out above the upper band of the trading range of $45.00 to $50.00 to reach $59.50 by the month end. The fiscal 2012 second-quarter revenue and net earnings that beat estimates took the share price to around $67.00 in the first week of August. On August 20, Stratasys registered a new 52-week high of $73.32 per share. Two weeks later, the company stated that it had signed a memorandum of understanding to settle the merger litigation.

On November 2, Stratasys reported fiscal 2012 third-quarter results. The net sales for the fiscal 2012 third-quarter increased to $49.72 million from $39.95 million in the year-ago corresponding period. The revenue estimate of analysts was $48.4 million for the third quarter of fiscal 2012.

The net income for the third quarter declined to $5.18 million, or $0.24 per share, from $5.85 million, or $0.27 per share, in the comparable period of third-quarter 2011.

Non-GAAP net income for the fiscal 2012 third quarter was $8.7 million, or $0.40 per share, compared to $6.2 million, or $0.29 per share, in the year-ago similar period. The EPS estimate of analysts was $0.37 for the third quarter.

For fiscal 2012, Stratasys narrowed its revenue expectation to the range of $194 million to $199 million. The previous revenue guidance was between $193 million and $198 million. The non-GAAP earnings guidance was raised to $1.37 to $1.40 per share, versus previous guidance of $1.31 to $1.38 per share. Stratasys also lowered GAAP earnings guidance to the range of $0.77 to $0.88 per share. The earlier GAAP outlook was $0.83 to $0.98 per share. The company clarified that GAAP earnings guidance includes the estimated impact of Objet Ltd. transaction-related expenses.

Considering the secular growth, Piper Jaffray upgraded Stratasys from “neutral” to “overweight” with a price target of $76.00 per share.

Considering the high valuation Stratasys commands in comparison to its fundamentals, a report published by “Motley Fool” yesterday, an hour before the close of market, cautioned investors of the downside risk involved.

Stratasys ended yesterday’s trading session at $65.23, up $0.38 or 0.6% on a volume of 407,713 shares.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.