Market Overview

HP Could Cause Problems For 3D Printing Stocks

HP Could Cause Problems For 3D Printing Stocks

Moves by HP Inc (NYSE: HPQ) could put 3D printing stocks under pressure. UBS’ Steven Milunovich maintained a Sell rating for Stratasys, Ltd. (NASDAQ: SSYS), with a price target of $19.

“We continue to view 3D printing as a classically disruptive technology, starting in niche markets addressing non-consumption then moving into mainstream production as the technology improves,” analyst Steven Milunovich wrote.

Impact On 3D Printing Companies

Shares of Stratasys and 3D Systems Corporation (NYSE: DDD) had surged on sequential revenue growth in 4Q and outlook for modest revenue growth in 2016. Milunovich pointed out, however, that there are growing concerns surrounding HP’s entry later this year. He added, “Although HP Inc should grow the pie over time, the initial impact could be negative for today’s leaders.”

Margin Pressure

HP could formally announce its Multi Jet Fusion offering in a few months, with availbility by the end of 2016. The analsyt believes that HP would not pursue a consumables monetization model. Instead the company may open up materials to third parties to make cost reasonable. HP would make money on hardware, services and fusing agents.

Milunovich commented that currently, Stratasys records gross margins of about 80 percent on materials, and this would come under pressure due to HP’s planned moves.

Latest Ratings for SSYS

Jan 2019UpgradesNeutralOverweight
Aug 2018MaintainsUnderperformUnderperform
May 2018MaintainsHoldHold

View More Analyst Ratings for SSYS
View the Latest Analyst Ratings

Posted-In: 3D Printing Steven Milunovich UBSAnalyst Color Short Ideas Reiteration Analyst Ratings Trading Ideas Best of Benzinga


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