Market Overview

Macro Headwinds Provide Good Entry Point For Proto Labs, Says Canaccord

Share:
Macro Headwinds Provide Good Entry Point For Proto Labs, Says Canaccord

Shares of Proto Labs Inc (NYSE: PRLB) have declined "substantially" due to U.S. macro concerns regarding industrial production, according to Bobby Burleson of Canaccord Genuity. The stock is lower by nearly 7 percent over the past five days alone and lower by more than 20 percent over the past year.

Burleson commented in a research report on Thursday that the selloff in Proto Labs' stock represents a "solid entry point" given its strong business model and an attractive valuation.

Business Model

According to Burleson, Proto Labs' proprietary software makes it a leader in the space, and there is unlikely to be a challenger to its "leading position" in quick turn CNC machining and injecting molding services.

The analyst added that Proto Labs' "strongly ramping additive" manufacturing business represents a tailwind to gross margins as its recently acquired facilities in Europe increases its capacity utilization over the remainder of 2016.

Related Link: 3D Printing: The Next Biggest Trend In Shoes

In addition, Proto Labs is in a strong position to grow its share of unique product developers through an improved marketing effort.

Valuation

Burleson continued that Proto Labs' exposure to customer R&D activity has made it a "lagging indicator of industrial demand." In fact, the company hasn't seen any macro-related weakness until the first quarter of this year compared to some of its peers that saw weakness as early as mid-2015.

As the macro environment improves over time, the company at the very least can maintain its market share, which justifies "at least" a valuation of 15x EV/EBITDA on 2017 estimates. By comparison, the analyst pointed out that the range prior to the macro-related slowdown has been roughly 15x to 20x.

Shares remain Buy rated with an unchanged price target of $65, which implies a 14.6x multiple to the analyst's 2017E EBITDA.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for PRLB

DateFirmActionFromTo
Sep 2020BenchmarkMaintainsBuy
May 2020BenchmarkInitiates Coverage OnBuy
Jan 2020BerenbergDowngradesBuyHold

View More Analyst Ratings for PRLB
View the Latest Analyst Ratings

 

Related Articles (PRLB)

View Comments and Join the Discussion!

Posted-In: Analyst Color Long Ideas News Reiteration Analyst Ratings Movers Tech Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
PMTB of A SecuritiesMaintains18.5
IVRB of A SecuritiesMaintains3.0
EFCB of A SecuritiesMaintains15.5
NYMTB of A SecuritiesMaintains3.5
NLYB of A SecuritiesMaintains8.5
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com