3D Systems Upgraded At Longbow, Earnings Miss Now 'Less Likely'

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In a report published Wednesday, Longbow Research analyst Joe Wittine upgraded the rating on 3D Systems Corporation DDD from Underperform to Neutral, following the pressure on the company’s shares year-to-date.

3D Systems’ shares have plunged 56 percent so far this year. Although 3D Systems’ 4Q14 and 1Q15 results missed expectations, the shares are down 46 percent since the company reduced its first-quarter guidance, putting the risk/reward “in better balance,” analyst Joe Wittine said.

Wittine believes that the post-EPS call trade risk in 2Q “is skewed to the upside.” This is because this quarter’s lack of a pre-release suggests that the company may have “reset 2Q expectations enough” with the lackluster 1Q pre-release in April, indicating an 18 percent sales miss, and full report in May.

“DDD could also deliver on, or express further confidence in, its goal of 2H operating leverage (note new R&D sharing agreement with U.S. Navy), or even restore guidance,” the Longbow Research report stated.

Wittine added that the June Quarter was poised to benefit from the addition of five new resellers since April 1, including:

  • Acquiring Easyway in China
  • Adding HK 3D in the UK
  • Adding Konica Minolta’s Australia sales channel
  • Adding Thermo Fisher Scientific for U.S. K-12
  • Adding MLC CAD in the U.S.

“A 2Q miss appears less likely and valuation has corrected materially, limiting incremental short opportunity,” the report said.

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Posted In: Analyst ColorUpgradesAnalyst RatingsLongbow Research
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