Brean Capital Reviews 3D Systems' Downward Spiral

In a report published Monday, analyst Ananda Baruah of Brean Capital maintained his Hold rating on

. The company has pre-announced disappointing March quarter results. Given the preliminary results, the analysts expect the company to post 10-15 percent revenue growth and EPS of $0.40-$0.50 for the March quarter. The 2016 EPS is expected at $0.70-$0.85. "Until more clarity is available, we believe DDD could continue to trade at 25x - 35x P/E on '15 & '16 EPS, which places the stock at a $20 - $30," analyst Baruah stated. The disappointing pre-announcement was due to a considerable slowdown in deals towards the end of the quarter. According to Brean Capital, "Specifically, DDD stated that they felt in good shape going into March, and that deals that were tee'd up to close by Q end simply became placed under review by customers. While some have subsequently closed in April, it remains too early to get a sense of what a '15 run-rate may truly be." Industrial customers in the company's automotive, aerospace and healthcare segments stalled their orders due to macro pressures. 3D Systems is now reviewing its 2015 guidance, an update to which is expected when the company announces its March quarter EPS on May 6. In the meantime, the analyst expects the company to accelerate its cost cutting initiatives, with workforce reduction likely to be announced in the near future. However, 3D Systems has also indicated that it does not intend to halt its strategic investments. The company also mentioned that its organic revenue declined during the March quarter, which the analyst believes was "particularly disappointing." On a more positive note, the company also announced that it has been seeing stronger order activity in the first few weeks of the April quarter.