Market Overview

Watch Out: Stratasys Stock May No Longer Be Worth Buying

  • Stratasys, Ltd. (NASDAQ: SSYS) has seen a 66.8 percent decline in its share price, which hit a low of $25.50 on October 30.
  • Deutsche Bank’s Sherri Scribner has downgraded the rating on the company from Buy to Hold, while lowering the price target from $40 to $28.
  • The downgrade follows the company’s F3Q15 results and lowered guidance. Scribner believes that while near-term visibility remains limited, there also appear to be few catalysts for the stock.

Analyst Sherri Scribner believes that “until end-market demand improves,” there would be limited catalyst to drive the shares up and said that “the current glut of 3D printing machines installed over the past 2 years will put pressure on demand for the next 6-12 months, limiting revenue upside.”

While expressing optimism regarding the long-term growth outlook for the industry, Scribner stated that Stratasys’ stock is likely to remain range bound through 2016.

With the pressured demand environment, which is at its lowest since FY2009, the company “continues to see a challenging environment due to weaker capex investment by customers, which has been exacerbated by excess inventory in the market.”

Although Stratasys reported its F3Q15 results in line with its preannouncement, product revenue declined 26 percent year-on-year, due to market softness and MakerBot reorganization. MakerBot sales declined 55 percent year-on-year, although management implied a marginal quarter-on-quarter improvement in high-end systems.

According to the Deutsche Bank report, “Recent hardware declines led to consumables sales that were flat Y/Y, the lowest growth posted since FY-09. Also, GMs were at the lowest level in 19 Qs. It is unclear when the 3D printing market will recover from this adjustment phase, making it difficult to forecast forward results.”

The company’s F4Q15 sales and EPS guidance is significantly below the consensus forecasts.

Latest Ratings for SSYS

Jan 2019UpgradesNeutralOverweight
Aug 2018MaintainsUnderperformUnderperform
May 2018MaintainsHoldHold

View More Analyst Ratings for SSYS
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Sherri ScribnerAnalyst Color Downgrades Price Target Analyst Ratings


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