3D Systems Corporation (DDD): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
3D Systems reported robust third-quarter results thanks to increased adaptability of 3D printed solutions. However, earnings were affected by the manufacturing limitations faced by the company's metal printer division. Nevertheless, over the long term, the company is likely to reap the benefits of its product launches and global expansion. Also, the recent acquisition of Robtec bodes well for the company s growth. However, increased R&D costs along with the severely competitive nature of the industry remain matters of concern. Hence, we have maintained our Neutral recommendation on 3D Systems.


Overview:

Headquartered in Rock Hill, SC, 3D Systems Corp. is a leading provider of 3D content-to-print solutions including 3D printers, print materials, on-demand custom parts services and 3D authoring solutions for professionals and consumers, worldwide. The company also provides scanners for a variety of medical and mechanical X-Ray film digital archiving.

The company's primary print engines comprise stereolithography, selective laser sintering, multi-jet modeling, film transfer imaging, selective laser melting and plastic jet printers, as well as ZPrinters. Its 3D printers convert data input from computer aided design (CAD) software or 3D scanning and sculpting devices to produce physical objects from engineered plastic, metal and composite print materials.

3D Systems primarily caters to a broad range of industries including manufacturers of automotive, aerospace, computer, electronic, defense, education, consumer, energy and healthcare products, as well as original equipment manufacturers, government agencies, universities, independent service bureaus and individual consumers.

3D Systems pursues a growth strategy that essentially focuses on five strategic initiatives:

Expand Quickparts Services: As a supplement to its 3D printer solutions, the company maintains a global network of parts printing service locations branded as Quickparts, which are designed to provide customers a single source for all their design-to-manufacturing needs. 3D Systems believes growing and expanding its Quickparts services, through organic growth and acquisitions, will enable it to customers to the newest 3D additive production technologies, thereby building its brand and customer loyalty.

Accelerate 3D Printer Penetration: 3D Systems intends accelerating its 3D printer penetration through channel expansion, new products and enhanced 3D printing materials, so as to generate higher revenue from recurring sales of print materials and services. Therefore, the company has developed an extensive portfolio of 3D printers and continuously expands its reseller channel for printers and trains resellers to perform installation and services for those printers. In 2013, revenue from the sale of printers was $207.1 million or 40.3% of the company's total revenue.

Boost Healthcare Solutions Revenue: By leveraging the company's core competencies in healthcare solutions applications and expanding into new applications, 3D Systems intends to generate higher revenue within this highly potential marketplace. Healthcare solutions revenue includes the related sales of printers, print materials and services for hearing aid, dental, medical device and other health-related applications. In 2013, healthcare revenue was $71.7 million, or 14.0% of the company's total revenue.

Build 3D Consumer and Retail Products and Services: 3D Systems wants to make its consumer printers more affordable for increased adoption. 3D Systems intends to build this capability through a combination of internal developments and acquisitions. In 2013, consumer solutions revenue was $34.8 million, or 6.8% of total revenue.

Reimagine the Engineer's Desktop. 3D Systems intends providing an integrated 3D authoring solutions platform, including software, perceptual devices and tools to combine, capture, mesh, surface, model and measure, so as to be able to continue to expand the applications and utilization of 3D printing. This process is expected to aid seamless integration throughout the design and manufacturing processes. In 2013, software revenue was $20.6 million, or 4.0% of total revenue.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




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