Analyst Roundup After 3D Systems 3Q Results

Analysts commented on 3D Systems Corporation DDD after it posted mixed Q3 results Monday.

Shares fell Tuesday afternoon to $34.86, down 3.75 percent.

Below are analyst comments along with current ratings and price targets.

Citi - Neutral, $40 price target

“3D Systems announced a number of executive additions / promotions in the past few weeks that we believe will help upper management stay in their lanes of responsibility. We believe the addition of a COO and a lead to oversee the consumer business will ultimately result in more consistent performance. We believe management will need to demonstrate several quarters of sound execution to recapture some credibility after consecutive poor showings and for failing to deliver 3 months after raising expectations in Q2.”

Brean Capital - Hold, no price target

“We continue to look to ’15 Revenue and Operating Margins as a moving target given the recent hiccup in DDD’s Metal’s business (along with Consumer) altering organic growth expectations, as well as the optionality on Opex investment (invest or pass thru to EPS). That said ,DDD demonstrated solid Opex control in the Sep Q, which the company indicated was a precursor for a flattish to perhaps slightly down cadence of Opex as a percentage of Revenue going forward – which we’d view as supportive of the company’s ability to begin achieving/beating EPS going forward.”

Imperial Capital - Outperform, $42 price target

“In 3Q14, DDD recorded organic revenue growth rate of 12 percent year-over-year (yoy). Top line was adversely affected by delays in launch of new consumer products as well as lower growth in materials, services, and software. Majority of the organic growth is from the metals business, which is a result of the acquisition of Phenix Systems on 7/15/13. Printer gross margins of 35.3 percent are down 10 points yoy, likely from competitive pressure and execution issues. Backlog is at $46mn. In our opinion, DDD has built an industry leading ecosystem of Additive Manufacturing hardware, materials, software, and services. However, lower organic growth rates and declining margins are near-term headwinds. New product announcements at EuroMold and CES raise the specter of continued execution challenges in 2015.”

Oppenheimer - Outperform, $57 price target

“Weak organic growth has likely bottomed. Tepid low-teens organic growth was mostly from consumer shipment delays. With these now shipping, four of the five remaining product units reported double-digit organic growth, greater metals contribution, and record-high orders (70 percent are organic), we expect organic growth to rebound from the 3Q14 low-point.”

Credit Suisse - Neutral, $54 price target

Service growth muted but Quickparts should drive improvement. While Quickparts (on demand parts) only grew 10 percent organically in the quarter, the backlog grew 60 percent q-o-q which suggests to us that demand is picking up. We are somewhat concerned with the organic growth in Printer services (~10 percent of total sales) which was only ~3 percent YoY. However, Printer services should structurally grow with the installed base of professional and production grade printers, and although resellers will be servicing many machines, DDD will still yield good margin revenues on replacement parts. “