On Mar 1, Zacks Investment Research downgraded
3D Systems Corp.
) to a Zacks Rank #5 (Strong Sell) from a Zacks Rank #3
Why the Downgrade?
Earnings estimates for 3D Systems have declined, owing to
disappointing fourth-quarter 2013 results. The company has
delivered negative earnings surprises in 3 out of 4 quarters,
with an average miss of 12.78%. Additionally, the company's stock
price has fallen more than 20% since Jan 2014.
On Feb 28, 2014, 3D Systems reported fourth-quarter and full
year 2013 results. For the quarter, non-GAAP earnings came in at
16 cents per share, which was 27.3% below the Zacks Consensus
Estimate of 22 cents.
The gross margin was flat year over year at 51.7% as higher
sales were more than offset by unfavorable mix and
extraordinarily high concentration of new product announcements.
The operating margin also contracted approximately 620 basis
points to 11.6% versus 17.9% in the prior-year quarter. During
the quarter, the company witnessed a rise in research and
development (R&D) expenditures as well as sales and marketing
The 3D printing industry is highly dependent on patented
technologies, which play an important role in determining a
company's performance. 3D Systems is likely to face stiff
competition in the future as some of its primary patents are
about to expire in 2014.
Following the earnings release, the Zacks Consensus Estimate
for 2014 declined 15.6% to 81 cents per share in the last 7 days.
For 2015, the Estimate fell 18.3% over the same time period and
is currently pegged at $1.25 per share.
Notably, 3D printing is a relatively new concept and is likely
to take time to gain popularity. Most of the stocks in the
industry are on the downhill so far in 2014. Share prices of
) are down 7.5% and 27.9% respectively while that of
), a recently-listed 3D printing company, is down 16.02%
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