Why Is Gabelli Downgrading 3D Systems?

On Tuesday, Gabelli and Company issued a note on 3D Systems Corporation DDD after the company held a conference to review fourth-quarter financial results. 3D Systems reported Q4 revenue of $183 million, which fell 2 percent year over year, and EPS of $0.19. After disappointing revenue results, analysts at Gabelli downgraded 3D Systems from Buy to Hold, while a price target is unavailable.

Hendi Susanto, an analyst at Gabelli and Company, wrote, "We view that growing global macroeconomic challenges, weak investment in capital equipment, the negative impact of excess system capacity, longer sales cycle and low market visibility may result in negative sales performance in 2016. We continue to believe that visibility will remain non-existent and maintain low expectations for market growth in 2016."

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While Gabelli downgraded 3D systems, they did highlight one key catalyst that can drive the company's share price higher going forward: margin improvement.

The analysts noted that company management has taken a strong focus on cost reductions and operating efficiency, which can directly impact their bottom line. Furthermore, 3D Systems plans to grow sales of higher margin items as they improve their portfolio mix.

3D Systems was recently seen down 9.90 percent at $13.02.