Manufacturers of 3D printers and materials have been getting
mixed signals lately from Wall Street. Analysts laud the
industry's long-term growth prospects, but waver on just how much
growth to expect, and when.
That uncertainty aided the recent slide in shares of leading
3D printer manufacturers such as3D Systems (
) andVoxeljet (
Each of those companies makes printing machines and systems
that can produce three-dimensional objects from computer data.
The gear can be used to design complex manufacturing tools or let
your kid create a toy at home.
The global industry is expected to more than triple over the
next several years as manufacturers expand the size and scope of
3D printing, also called additive manufacturing, has become
more pervasive in a variety of different commercial and
industrial applications. Companies use it to design everything
from auto parts and aircraft components to prosthetic limbs,
architectural models and energy systems.
The two top players -- 3D Systems and Stratasys -- both saw
share prices hit record highs during the first week of
Since then, however, the stocks have been in retreat. 3D
Systems has recovered to about 17% below its January high.
Stratasys is down about 8% off its high.
Shares have been hurt, in part, by lowered expectations for
near-term growth. Analysts are also uncertain over how to value
stocks still trying to scratch their way into the mass
A recent note from analyst Bobby Burleson of Canaccord Genuity
said he expects 2014 to be a year of "growing complexity for the
investment landscape" in 3D printing.
"Recent history has seen the sector emerge from the skepticism
of 'why now? -- 3D Systems and Stratasys have been around for a
long time -- to a broader acceptance," Burleson noted.
Skepticism then gave way to rising reservations about
valuations. "Many of the investors we spoke with in 2012 and 2013
(were) actively working to understand the sector while waiting
for a pullback," Burleson wrote.
There is also concern over how 3D printing companies will
maintain the growth rate of recent years.
Most see the solution in technologies designed for sales to
consumers and professionals.
"A lot of it depends on their ability to deliver competitive
costs in high-volume production,"
"They need to address the markets for consumers and
professionals in addition to the traditional industrial markets,"
said Hendi Susanto, analyst at Gabelli.
Some analysts, including James Kim of Nomura Equity Research,
see "excessive market optimism" about the 3D printing sector.
Growth potential in the consumer market remains uncertain, in his
view, and the industry lacks mass-production capability.
3D Systems and Stratasys are the dominant 3D printer players,
with 12-month trailing sales of $460 million and $400 million,
respectively. ExOne ranks third with 12-month trailing sales of
$42 million, followed by Voxeljet with $14 million.
3D Systems makes content-to-print solutions -- 3D printers,
materials, on-demand custom parts services. It also provides
content creation and design productivity software platforms. Its
products are most often used in commercial settings like the
aerospace/defense, health care and automotive industries, as well
as consumer applications and hobbies.
It gets just more than half of its revenue from the U.S., with
Europe accounting for about 28% and Asia 16%.
Stratasys specializes in high-performance and professional 3D
printers and consumable materials for rapid prototyping and
direct digital manufacturing applications. It makes applications
for industrial, commercial and consumer use, and gets more than
half of its revenue from North America, with about 29% coming
from Europe and 16% from Asia.
ExOne focuses exclusively on the industrial market, making 3D
printing machines and products to the specifications of
customers. About half of its revenue is from Germany, with the
U.S. accounting for 27% and Japan 24%.
Germany's Voxeljet is the only non-U.S. company in the mix. It
specializes in large-format 3D printers for industrial and
commercial clients, mainly in the aerospace, automotive,
entertainment and engineering sectors. The lion's share of its
business -- about 85% -- comes from Europe, the Middle East and
Of the two industry leaders, 3D Systems has a bigger stake in
metal 3D printing, thanks partly to its buyout last year of
Phenix Systems, a French maker of direct metal selective laser
sintering 3D printers.
However, a December report from FBR Capital said Stratasys
might expand its product portfolio by acquiring a metal 3D
"A key gap in the company's product/technology portfolio is in
metals," FBR analyst Ajay Kejriwal noted. "Management has
indicated interest in looking into metal in a very serious way. A
move into this space could round out an already impressive
Analyst Susanto, citing data from Wohlers Associates, puts the
global market for 3D printers at $2.2 billion in 2012, rising to
$6 billion in 2017 and $10.9 billion in 2021.
Industry researcher Freedonia Group offers a slightly more
conservative estimate. In its recent report titled "World 3D
Printing to 2017," Freedonia said demand for 3D printing "is
projected to rise more than 20% per year to $5 billion in
The industry is scattered with small, privately held players,
though many are being snapped up as the industry
3D Systems has been a particularly busy acquirer. The Rock
Hill, S.C., company has made more than 40 acquisitions in the
last three years, diversifying its product line and expanding its
Stratasys hasn't been nearly as active on the M&A front.
However, it probably made the biggest splash last year with its
$400 million buyout in August of MakerBot, a Brooklyn, N.Y.-based
upstart that specializes in affordable 3D printers for the home
Susanto estimates that about 60% of MakerBot sales go to the
3D desktop professional market, which includes architectural
design companies, product development applications and aerospace
Meanwhile, Stratasys has worked to increase MakerBot's
exposure to consumer markets.
"MakerBot is now available in 42Microsoft (
) stores, and Stratasys has established relationships withAmazon
(AMZN) andAutoDesk (ADSK) as resellers," Susanto said.
Financially, 3D printing companies have run into a few more
head winds lately. Stratasys last month projected 2014 EPS below
street estimates, though the company's revenue outlook exceeded
Analysts expect 3D Systems to deliver a 19% decline in
earnings when it reports its 2013 Q4 results on Feb. 28. That
would give the company a 5% annual EPS gain for the year, down
from 77% in 2012 and 81% in 2011. Analysts polled by Thomson
Reuters project a 1% EPS gain in 2014.
ExOne, which is due to report fourth-quarter and full-year
2013 results next month, lowered its 2013 revenue outlook on Jan.
14. It cited sales delayed by customers in Russia, India, Mexico
The slowing trend notwithstanding, analysts don't sound too
worried about the industry.
"Monthly orders and quarterly numbers will only tell a small
piece of the story," analyst Brian Blair of Wedge Partners noted
in a recent report. "We believe this is a multi-year story that
is only beginning to unfold."
The bigger story, he says, is that prices of printing machines
are destined to drop. The sector will need volume gains at both
the low and high ends to maintain momentum.
Freedonia Group projects some of those volume gains will be in
the medical and dental markets, "with especially good
opportunities expected in dental applications such as braces,
prostheses, crowns, bridges, dental aligners and models for
dental restoration procedures."
Other growth markets for 3D printing products include consumer
products like jewelry, toys and consumer electronics, and
aerospace, which Freedonia reckons will deliver above-average
Analysts expect the U.S. to remain the largest global market
at more than 40% of global sales, though Western Europe and China
should be strong growth areas as well.
The basic technology used by modern 3D printer manufacturers
dates back more than 30 years, to when 3D Systems founder Chuck
Hull invented and patented what he dubbed
The technology continues to advance as 3D printers are used in
more applications. But the main focus is on building machines
that can do more things at a lower price.
Do a Web search for cheap 3D printers and you'll find some
personal models listed for as little as a few hundred dollars.
Most of these are offered by smaller, privately held firms. On
its website, 3D Systems lists personal 3D printers starting at
Meanwhile, high-end, industrial grade printers can cost tens
of thousands of dollars.
Analyst Blair says the industry is "on the cusp of disruption
in the manufacturing sector" as 3D printing sector evolves.
The timing of breakthrough to mass adoption "isn't at all
clear," Blair noted. "What is clear is that the capabilities of
3D printers are getting better every six months, and the ease of
use is improving, as is the quality of what is available under