Jefferies Slashes 3D Systems, Stratasys Targets On Degradation And Worse Channel Management

In a report published Tuesday, Jefferies analyst Jason North said that investors were concerned about when and if the industry would return to growth of more than 20 percent. The analyst added that both

and

are likely to report weak Q2 results and a "muted Q3 rebound." North said that core SSYS was likely to return to +20 percent trendline growth in Q4, versus "later (if ever) for DDD." In fact, 3D Systems' quarterly revenues were likely to remain below 20 percent for the next six quarters. In the report Jefferies noted, "Our checks indicate that most of the end-use part demand will rely on new initiatives that will take a while to ramp: customers employing new business models, startups that use 3D printing, and new 3D printing technologies being launched by SSYS and DDD, which makes our previous expectation of a H2:16 time frame unlikely for SSYS and DDD." North maintained a Buy rating on Stratasys, while reducing the price target from $60 to $50. The EPS estimate for 2016 has been reduced from $2.00 to $1.86. Jefferies maintained a Hold rating on 3D Systems, while reducing the price target from $22 to $14. The EPS estimate for 2016 has been reduced from $0.86 to $0.68. "We trim our DDD estimates and targets more than SSYS' due to our survey indicating more degradation in DDD spending intentions vs. our January survey and worse channel management vs. SSYS," North explained.