Market Overview

The Lesser-Known Way To Play Metal 3D Printing

The Lesser-Known Way To Play Metal 3D Printing
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Materialise Remains Pacific Crest's Favorite Near-Term Idea In 3D Printing

  • Shares of Materialise NV (ADR) (NASDAQ: MTLS) have lost more than 30 percent from a year ago.
  • Weston Twigg of Pacific Crest maintained an Overweight rating and $11 price target on Materialise.
  • Materialise has the "best exposure" to the metal 3D printing market.

In a report published Thursday, Pacific Crest analyst Weston Twigg commented on the metal-based 3D printing market, noting that metal 3D printing growth should "remain high" despite an overall "sluggish" environment for 3D printer demand.

According to Twigg, metal-based 3D printers will represent roughly 14 percent of the total 3D printing market in 2016, up from just six percent in 2013. Demand will continue coming from industrial, aerospace and automotive customers.

Twigg continued that Materialise will benefit the most given its multiple partnerships with metal printer companies while its software is "widely" used to produce metal parts. On the other hand, 3D Systems Corporation (NYSE: DDD) sells metal printers but continues to suffer from large-format issues and brand damage while Stratasys, Ltd. (NASDAQ: SSYS) has no metals product other than its printing services.

Materialise Offers Best Exposure To Metals Growth

Twigg further noted that Materialise will continue benefiting from growing metal 3D printing demand, despite increasing competition in the space. In fact, the company supports customers with high-end software and services. The company saw its 3D printing software sales rise 48 percent year over year in the first half of 2015 to €12.1 million.

Looking forward, the analyst is expecting Materialise to announce additional partnerships through its build processors and for its software solutions to be "more widely adopted," mostly due to tis compatible software and optimization tools.

Finally, Twigg stated that 3D Systems may require some "damage control" while Stratasys' businesses could benefit from growing metals demand. However, Materialise is the analyst's top pick in the group as metal 3D printing demand will stay "hot" and the company offers a "differentiated" software solutions and optimization software tools used in 3D printing metal parts.

Shares remain Outperform rated with an unchanged $11 price target.

Latest Ratings for DDD

Oct 2016FBR CapitalAssumesMarket Perform
Aug 2016JefferiesMaintainsHold
Jul 2016PiperJaffrayDowngradesNeutralUnderweight

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