RBC Says Stratasys 'Demand Drying Up Quicker Than Ink,' Downgrades To Sector Perform

In a report published Wednesday, RBC Capital Markets analyst Amit Daryanani stated that 3D printing is a "disruptive" technology that will eventually become omnipresent across many industries. However the recent string of negative pre-announcements from

and more recently

proves the industry is "rather immature" in its current state and "nascent" in terms of customer communication, distribution, channel management and managing new product launches. Daryanani noted that Stratasys negatively pre-announced its March quarter revenue to a range of $171 million to $173 million (versus Street expectations of $199 million) and earnings per share to a range of $0.02 to $0.04 (versus the Street's expectations of $0.29). The company's negative pre-announcement was attributed to a decline in capital spending, especially in North America, a slower adoption of Connex portfolio given eight new launches in the second half of 2014 and a slower than expected growth in Asia Pacific and Japan. "While we do think long-term this industry will sustain 20 percent plus revenue growth this maybe more volatile then we had expected," Daryanani wrote. "Finally, its unclear if the winners will be the incumbents (Stratasys, 3D Systems, etc) or the new but established entrants like

, who has a better channel, distribution and customer strategy." Following Stratasys' pre-announcement, Daryanani is now expecting the company to earn $0.03 in the March quarter (from a prior $0.24 estimate) on revenue of $171.5 million (from a prior estimate of $198 million). Daryanani also slashed his full year 2015 revenue estimate to $822.2 million (from $950 million) and 2016 revenue estimate to $964 million (from $1.1872 billion). Shares were downgraded to Sector Perform from Outperform with a price target lowered to $44 from a previous $82.