Has 3D Systems Hit A Bottom? The Street Weighs In

Shares of 3D Systems Corporation DDD closed at $13.60 on Thursday, roughly $2 higher than its 52-week low of $11.66 which was established earlier in the week.

The question investors are now asking is if shares hit a bottom and can only rise from its deflated levels after the company's second-quarter print in which both revenue and earnings fell short of consensus estimates.

Pacific Crest: Fair Value Around $10

Weston Twigg of Pacific Crest Securities commented in a note that 3D Systems still faces "so many problems" as evident in its second-quarter print. Specifically, the high margins Material segment hasn't grown in seven quarters at a time while the company's inventory grew "meaningfully more" than revenue in the quarter.

Twigg also noted that operating expenses are "still trending up" and the company's reputation in metal printing has been "damaged."

Nevertheless, the analyst stated that 3D Systems has some "very good" businesses and products and the company should remain viable. However, there is a lack of evidence of improved operating execution and investors should "avoid the name."

Shares remain Sector Weight rated (no assigned price target) with a "fair value" valuation of $10.

Related Link: Why Is 3D Systems Skyrocketing?

Jefferies: Remain On The Sidelines

Jason North of Jefferies commented in a note that 3D Systems recognizes it has problems with its resellers and product reliability and the company's operating expenditure spend is the "right long-term decision" (versus a previous guidance of operating expenditure down in the bottom half of 2015) even at the expense of pressuring its earnings per share.

However, North pointed out that that 3D Systems' investments are "defensive" and focused on "fixing what's gone wrong." This directly contrasts Stratasys, Ltd. SSYS whose investments are focused on new technologies and penetrating end-use part manufacturing.

Finally, North offered three reasons why he remains on the sidelines: 1) 3D Systems has a high exposure to new entrants that will pressure long-term gross margins, 2) the company has a weaker reseller relationship, 3) continued metal printer issues.

Shares remain Hold rated with a price target lowered to $13 from a previous $14.

Piper Jaffray: Signs Of Growth

Troy Jensen of Piper Jaffray upgraded the stock to Neutral from Underweight with a price target lowered to $14 from a previous $16 as several proprietary data points suggests improvements with channel partners at a time when the overall sector will likely see growth in 2016 and beyond.

3D Systems highlighted that industrial customers resumed planned purchasing during the second quarter. As such, the analyst suggested that demand began to "re-accelerate modestly" in the quarter which will carryover through the rest of the year and yield "incremental improvements."

Finally, Jensen acknowledged 3D Systems faces quality issues within its metal portfolio and is working to fix the issues with its customers. The analyst noted the metal 3D market is "inflecting" within Aerospace and Medical vectors and represents a "large market opportunity" if it resolves the quality issues. In addition, the company is likely developing a new metal Platform through its recently acquired Laywerwise which is expected to have better in-processing monitoring capabilities and feedback loop functionality.