Imperial Downgrades ExOne, Questions 3D Printing's Adoption Growth

Imperial Capital’s Saliq Khan downgraded the rating on ExOne Co XONE from In-Line to Underperform, while raising the price target from $8 to $9.

Macro Headwinds

Although management is focused on growing the company’s leased machines and non-machine revenues, Khan believes that the recent share price does not account for the macro headwinds that could impact growth in 2016, such as the depressed energy sector, currency devaluation and possibility that capital equipment purchases could be delayed.

“Although we remain encouraged by management’s ability to grow the top-line, improve the backlog, and improve operating costs in the long term, we believe that investors may not be correctly valuing the shares and the company’s outlook over the next twelve months,” Khan elaborated.

Related Link: PacCrest's Twigg Not Buying ExOne Yet; Stock Up 4%

Strong 4Q15 Results

The analyst also mentioned that the company reported higher than expected 4Q15 results on March 22. Management highlighted that the revenue on 12 machines had been recognized, 10 of which were larger machines.

“As ExOne sells more printers, we believe service contracts, replacement parts, and consumables are likely to help generate additional ongoing revenue, which is a focus area for the management team,” the analyst added.

However, the 2016–2017 estimates have been lowered to reflect management’s cautious outlook for 2016.