Stratasys Outperforming In Its Space, Piper Jaffray Finds Shares 'Attractive' At These Levels

Troy Jensen of Piper Jaffray upgraded shares of Stratasys, Ltd. SSYS from Neutral to Overweight with a price target boosted to $28 from a previous $21 after conducting a survey with resellers.

According to Jensen's survey of 15 Stratasys resellers, system demand for the 3D printing company performed better than expected throughout the March quarter. Specifically, eight resellers mentioned an above plan quarter while just four indicated their quarter came in below expectations.

Jensen emphasized the fact that the survey results marks the first time in over two years that positive responses outnumbered negative responses. In addition, the survey also marks the second consecutive quarter of significant system demand improvement.

Material Sales Also Strong

Jensen's survey also found strong demand for material sales. Among the same 15 resellers, seven indicated that material sales were above plan and not one single reseller reported a worse-than-expected quarter.

The analyst suggested this "speaks to strong utilization rates" among Stratasys customers who own a machine and also bodes well for the company's first-quarter profit margins.

Acceleration From F123 Series

Jensen also noted that Stratasys will consolidate its mid-range portfolio line and launch a new series of F123 3D printers between $25,000 and $50,000. Initial feedback from resellers was "exceptionally positive" and the new platform offers an opportunity for the company to "refresh an aging installed base of" legacy Dimension systems.

Bottom line, based on the positive feedback from the analyst's channel survey and the stock trading at a "depressed multiple" (1.3x EV/sales), shares have "limited" downside but "material" upside in an improving demand environment.

At last check, Stratasys was up 10.42 percent at $23.52.

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