Stratasys Seeing A 'Slow Start In Transition Year,' According To Analyst

Shares of Stratasys, Ltd. SSYS are up about 5 percent on Wednesday afternoon, after the company announced that MakerBot signed an agreement that makes D&H Distributing a distributor of its 3D printers and scanners in education, healthcare and government verticals in the U.S.

Before the announcement, research firm Canaccord lowered its price target on the stock, from $100 to $82, maintaining however a Buy rating. The rating is based on the firm’s “long-term positive view for revenue growth and a resumption for earnings growth in 2016.”

Nonetheless, “2015 could be more back-half weighted than our previous expectations, driven by lengthening sales cycles at resellers and a challenging integration effort for Digital Manufacturing. An imminent recovery for MakerBot also appears unlikely given broader extruder head quality issues were just beginning to get addressed late Q4 into early Q1 and drove the majority of the MakerBot demand deceleration.” Consequently, the analysts are adjusting their risk/reward profile, and thus cutting the price target, as mentioned above.

Estimates also saw a downwards revision. First quarter revenue was lowered from $199.9 million to $198 million; the full year projection, from $950.9 million to $940 million; and the 2016 estimate, from $1.189 billion to $1.159 billion.

EPS estimates were also reduced. The firm now expects EPS of $0.28 for the first quarter –down from $0.32, EPS of $2.07 (versus a prior $2.16) for 2015, and EPS of $2.51 (down from $2.85) for 2016.