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UPDATE: FBR Capital Markets Initiates Coverage on Stratasys on Attractive Position in High-Growth Sector

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In a report published Tuesday, FBR Capital Markets analyst Ajay Kejriwal initiated coverage on Stratasys Ltd. (NASDAQ: SSYS) with an Outperform rating and $155.00 price target.

In the report, FBR Capital Markets noted, “Stratasys is a leading additive manufacturing company with a market-leading portfolio of 3D printing machines, materials, and technologies. Our bullish call on SSYS is essentially based on five points: (1) our “stronger for longer” thesis for additive manufacturing that calls for higher-than-expected 3D printing industry growth rates to continue for a longer period of time, benefiting the stronger, innovation-driven companies, such as Stratasys, which have an early-mover advantage; (2) our expectation that Stratasys will deliver above-industry-average growth, driven by penetration of its newer products into the consumer, prototyping, and production markets (including the MakerBot Replicator 2, MakerBot Digitizer, 3Z Solidscape Wax 3D printer, and Objet30 Orthodesk), where our channel checks suggest rapid customer penetration and demand; (3) upside from the largely untapped verticals in medical, dental, and aerospace and in newer applications in industrial markets; (4) potential for significant margin expansion, driven by volume leverage and increasing consumable mix; and (5) likely upside from acquisitions and the addition of newer technologies and materials (including metal). We recognize that current elevated expectations raise the bar on execution and increase the risk for the shares from any external events. That said, we believe high growth rates could sustain SSYS's valuation and note that its valuation discount relative to peers should provide some cushion. We are buyers at current levels.”

Stratasys closed on Monday at $118.84.

Posted-In: Ajay Kejriwal FBR Capital MarketsAnalyst Color Initiation Analyst Ratings


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