Stratasys Tumbles on FY14 Announcement - Analyst Blog


On Tuesday, Jan 14, shares of 3D printing solutions provider Stratasys Ltd. ( SSYS ) dropped 8.18% post the company's announcement of fiscal 2014 guidance. The company expects its operating expenses to increase significantly during fiscal 2014 due to the incremental investments in sales & marketing and research & development costs.

Moreover, Stratasys expects second half of fiscal 2014 non-GAAP net income to be governed by the rate of adoption of its new products and changing schedules of operating expenses. The company expects its non-GAAP net income in the range of $113 million-$119 million, or $2.15 to $2.25 per share for fiscal 2014.

Additionally, Stratasys expects to spend $50 million to $70 million to aid growth and expansionary initiatives to increase its manufacturing capacity.

Regarding the top-line forecast, Stratasys expects fiscal 2014 revenues to range between $660 million-$680 million, higher than the fiscal 2013 revenue forecast of $470 million to $490 million. Additionally, the company expects strong organic revenues. Management also expects synergies from the MakerBot and Objet acquisitions to continue and result in incremental sales, going forward.

It is worth noting that Stratasys' third-quarter results were encouraging as the company reported better-than-expected sales on the back of solid performances from its Product and Services segments.

Increasing operating expenses due to regular product launches and global expansion has been an issue as the company operates in a high-cost business. Moreover, competition from big and small players like 3D Systems Corp . ( DDD ) adds to the company's concerns.

Nonetheless, the company's focus on the 3D printing market presents a favorable long-term opportunity as a large number of engineers, designers, architects and entrepreneurs are resorting to 3D solutions for their primary designing. Moreover, Stratasys has a huge installed base of 3D printing systems. Therefore, the company should be able to sell related consumables.

If this can be developed into a revenue stream, it would lend stability to its revenue model (since these revenues would be of a recurring nature). We believe Stratasys will remain a valuable company in the long term as the increase in customer usage, growth in the installed base and the company's initiatives to offer new applications for end users aid revenues.

Currently, Stratasys has a Zacks Rank #3 (Hold). Investors can also consider better-ranked stocks such as Western Digital ( WDC ) and NCR Corp ( NCR ). Both the stocks carry a Zacks Rank #1 (Strong Buy).

3D SYSTEMS CORP (DDD): Free Stock Analysis Report

NCR CORP-NEW (NCR): Free Stock Analysis Report

STRATASYS LTD (SSYS): Free Stock Analysis Report

WESTERN DIGITAL (WDC): Free Stock Analysis Report

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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.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DDD , NCR , SSYS , WDC

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