Brean Capital On Stratasys: 'Further Digestion Required,' Sees Downside Risk To $45

Ananda Baruah of Brean Capital on Wednesday commented in a note that "further digestion" is required following Stratasys, Inc.'s SSYS updated business model and lower MakerBot expectations before the stock can react positively to upside drivers.

"We believe Stratasys begins to look attractive at approximately $50 when taking a 2016 view, although we believe at least two to three quarters of digestion may be required," Baruah wrote. The analyst adds that after speaking with holders, it is clear that "there could be a period of digestion selling as folks re-position their thesis."

Baruah adds that shares could trade in a "reasonable" range of around $45 to $50 derived from a 20x 2015 earnings per share guidance of $2.15 and 20x $2.50 (a reasonable 2016 earnings per share estimate). However, "once the dust clears" and the company puts a few quarters behind it, shares trading in a range of $60 to $70 is reasonable.

Shares are Hold rated with no assigned price target.