On March 24, 2014, we issued an updated research report on
) post its fourth-quarter results. Despite delivering
better-than-expected fourth-quarter results, the 3D printing
solutions provider expects operating margins to be impacted by
higher-than-expected operating expenses.
Stratasys has a high cost structure and remains in the
investment mode. The company expects its operating expenses to
increase significantly during fiscal 2014 due to incremental
investments in sales & marketing and research &
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
Nonetheless, Stratasys' sizable installed base of 3D printing
systems enables it to sell related consumables. The recurring
nature of revenues from consumables lends stability to the
company's revenue model. This bodes well for Stratasys as with
the rapid adoption of 3D printing technologies would entail
higher contribution from the consumables segment.
Moreover, per ReportsnReports.com, the global 3D printing
market is expected to increase at an aggregate rate of 20.0%
every year and reach the $5 billion mark in 2017 buoyed by higher
demand in the medical and dental market.
Furthermore, pent up demand for 3D printing products is
expected from consumer products, automotive and aerospace
segments. Additionally, TechNavio forecasted the market for
global 3D Printer to grow at a CAGR of 16.3% (2012-2016).
To conclude, Stratasys' high-cost business model and
competition from big and small players like
3D Systems Corp.
) remain the 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
) which sports a Zacks Rank #1 (Strong Buy).
3D SYSTEMS CORP (DDD): Free Stock Analysis
MICRON TECH (MU): Free Stock Analysis Report
STRATASYS LTD (SSYS): Free Stock Analysis
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