3D printing solutions provider,
) is on an acquisition spree. Following the acquisition of
two-privately held companies, Solid Concepts and Harvest
Technologies, Stratasys has now signed an asset purchase
agreement to acquire some assets of Interfacial Solutions, a
production partner of Stratasys' Fused Deposition Modeling (FDM)
platform. The financial clauses of the deal were not disclosed.
The transaction is expected to close in the second quarter of
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Founded in 2003, Wisconsin-based Interfacial Solutions offers
production and thermoplastics research & development
(R&D) services to plastic industries. With the acquisition,
Stratasys will strengthen its R&D capabilities and also
enhance its overall production capacity. Moreover, since
Interfacial Solutions is already a Stratasys partner with respect
to thermoplastics development and manufacturing, the acquisition
enables vertical integration in this respect. This should lead to
better-quality products and reduce the time-to-market of future
We believe that the acquisition will also expand and enhance
Stratasys' additive manufacturing (AM) or 3D Printing Platform.
Also, this acquisition will enable Stratasys to attract new
clients and strengthen its overall market position.
It will also help Stratasys to cut out the middlemen, thereby
reducing operating costs and boosting long-term growth prospects.
Stratasys has resorted to strategic acquisitions to diversify its
offerings and expand its operating markets. The strong cash
balance of $414.1 million in the fourth quarter of fiscal 2013
enabled the company to go for strategic acquisitions.
Nonetheless, in the near term, Stratasys' investments are
expected to impact its operating results. Moreover, Stratasys
expects second-half fiscal 2014 non-GAAP net income to be
governed by the rate of adoption of its new products. Considering
the evolving nature of the 3D printing market and high cost of
operations, we believe much of the company's long-term
profitability will depend on efficient cost management.
To conclude, Stratasys' high-cost business model and competition
from big and small players like
3D Systems Corp.
) remain concerns. However, the acquisition of MakerBot and Objet
are expected to aid 3D systems business growth.
Currently, Stratasys has a Zacks Rank #3 (Hold). Investors may
consider a better-ranked stock like
Juniper Networks, Inc.
), which sports a Zacks Rank #1 (Strong Buy).