Oppenheimer's 3D Printing Observations From CES 2015

Oppenheimer on Wednesday issued a 3D printing industry update, with observations from Consumer Electronics Show.

Analysts Holden Lewis and Jessica Kenley commented that “CES 2015 did not unearth a lot of new dynamics. Exceptions would be potential emergence of Ultimaker in US prosumer...and an "integrated" vs. "best of breed" question emerging in software.”

Lewis did note that, “growth remains good, and there were not many new products from big OEMs. That is good. We believe 2013 and 2014 were aberrant years and 2015 could return to more normal patterns, and farming the investments of the past 12 months (rather than sustaining the aggressive rollout) should play a role.

“At current attractive valuations and fundamentals, we are buyers on recent weakness with our favorite name remaining,” which is 3D Systems Corporation DDD.

Initial observations were that “demand seems to be good” and that a true consumer market may be emerging but that the retail consumer channel needs a price point of $1,000 or below.

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Ultimaker’s “two new machines to give it a broader offering (not unlike what MakerBot and 3D Systems offer)...we think investors need to consider what the arrival of Ultimaker may mean for the incumbents (MakerBot and 3D Systems believe there is room enough for everybody).”

Lewis also noted that software competition is “heating up” with Autodesk, Inc. ADSK creating a digital thread from CAD to data manipulation to healing software, all designed to integrate with a printer (including its own Ember printer).”

The analyst note concluded by stating that “about the only thing that really changed for the 3D space based on the volatility of 2013 and 2014 was investor perceptions of volatility. That is not unfair. Still, we are hard-pressed to see much lasting impact to the long-term fundamentals.

“We believe 2015 will bring 25-30 percent organic growth rates (top end for [Stratasys, Ltd. SSYS], low end for 3D Systems), more normal volume-driven margin expansion (more for 3D Systems, less for Stratasys) and better cash flows (as investment spending winds down).

3D Systems closed at $30.88, up 2.24 percent.