Pacific Crest Bearish On 3D Printers, Notes Expensive Products, Pricing Pressures, Growing Competition

Weston Twigg of Pacific Crest took a hands-on approach to evaluating the 3D printing space. The analyst sent an entire chess set to several 3D printers for quotes using SLS, SL, and FDM processes. The results? Netherlands-based 3D Hubs offered the best price at $300 for an ABS material chess set, while 3D Systems Corporation (NYSE: DDD) quoted $4,152 for a similar ABS material set. Avoid 3D SystemsWith that said, Twigg suggested investors "continue to avoid" 3D Systems' stock following the pricing investigation. The analyst added that if his test is any indication, the company may soon need to lower its service prices (and corresponding margins) "meaningfully."The analyst added that he is "even more concerned" about the company as its poor pricing merely adds to already existing problematic issues and "highly visible" missteps over the last year.Twigg also noted that 3D Systems' user experience "was among the worst." As such, he is expecting "reasonable downside risk" to $10 per share.Proto Labs Faces Increased CompetitionMeanwhile, Proto Labs Inc (NYSE: PRLB) "struggled" to be price competitive in the analyst's tests, but pricing did improve with volume where incremental pieces became "quite competitive." In addition, the user experience was "very good" as the company focuses on engineering and designer use, rather than more consumer-oriented use.However, the analyst stated that Xometry, Proto Labs' closest direct competitor, "consistently" outperformed Proto Labs in both pricing and user experience. As such, the analyst stated that its 3D printing services (Fineline segment) could experience gross margin pressures as Xometry grows and Proto Labs attempts to maintain market share. The analyst estimated the stock's fair value to be around $62 per share.Stratasys Offers Midrange Pricing With Subpar User ExperienceFinally, Stratasys, Ltd. (NASDAQ: SSYS) was "generally priced in the middle" and as such the company may see only "moderate" price and margin pressures with the potential grab share from the more expensive 3D Systems.In addition to falling in the mid-price range, the user experience was "also midrange" and "didn't stand out." As such, as specialists continue to emerge that could disrupt its "closed ecosystem" the company faces longer-term risks.The analyst estimated the stock's fair value to be around $25 per share.