Oppenheimer On 3D Systems: An 'Encouraging' But Not Certain Big Picture

In a report published Tuesday, Oppenheimer analyst Holden Lewis discussed

's recent first quarter results in which the company's "positive efforts" at streamlining and integrating may have been lost or overlooked given the overall disappointing results. "We like the internal focus (and hope to hear more about it in Wilsonville next week)," Lewis wrote. "If volumes can return to growth, it should cement 2015 as trough earnings and benefit the stock." Lewis said an upcoming tour of 3D System's acquired Wilsonville R&D capabilities was not initially intended to be a "full-blown" analyst event but it may have taken on a more "meaningful" profile, with specific actions regarding operating efficiencies and channel efforts likely on the schedule. As such, 3D Systems has an "encouraging" but not yet certain, big picture. The analyst suggested the company saw a pickup in demand in the second quarter, but it is unclear if it is a normalization of demand or deferred orders slipping back. The company stated that recent challenges were attributed entirely on foreign exchange, deferrals and performance issues in a narrow range of products. Lewis also added that 3D Systems hasn't seen any deferrals related to upcoming new competition, and the company's "win/loss" record is unchanged. Moreover, pricing is not viewed as issue. Bottom line, 3D Systems is in a "productivity push" and using its scale to tackle procurement, shifting personnel to more productive use and coordinating engineering teams earlier in design processes. Even though the company hasn't issued 2015 guidance, it has offered some "teases" including a decline in SG&A dollars in the back half of 2015. Shares remain Outperform rated with an unchanged $38 price target.