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The Stratasys Bull Case Includes 2018 Strength, Buyout Potential

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The Stratasys Bull Case Includes 2018 Strength, Buyout Potential

Susquehanna Financial Group upgraded shares of Stratasys, Ltd. (NASDAQ: SSYS), citing a trio of factors. The firm hinged its upgrade on improved System revenue growth prospects, growing recurring revenue streams and takeover potential.

As such, the firm upgraded shares of the company from Neutral to Positive and upped its price target from $22 to $31.

At time of writing, Stratasys shares were rising 3.44 percent to $21.67.

Analyst David Ryzhik expressed increased confidence that Stratasys can return to system revenue growth in the calendar year 2018, or maybe as early as fourth-quarter 2017. The confidence is based on recent new product announcement and a stabilization in MarketBot business.

Growing recurring revenue streams provide downside protection to profits, given the above-average gross margin profile, the analyst said.

See also: 3D Printing: Still Worth It?

Susquehanna sees upside to earnings per share expectations, as it thinks consensus operating expenditure expectation is too high. The firm expects the company to continue to demonstrate operating expenditure control, which it embarked on when CEO Levin assumed office in the third quarter of 2016.

More importantly, the firm said M&A prospects should not be overlooked, as the company would provide a potential suitor with a market-leading position in an attractive secular trend, a broad product/IP portfolio and a growing recurring revenue stream.

The firm also said Stratasys' sizable deferred tax assets can potentially provide further value to potential acquirers.

Meanwhile, the firm views a return to core industrial segment growth, the company delivering a metals solution organically and increased materials utilization as catalysts.

The firm sees the valuation of Stratasys shares as attractive.

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Image Credit: Stratasys showroom, By Comher S.L (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

Latest Ratings for SSYS

DateFirmActionFromTo
May 2020JP MorganUpgradesUnderweightNeutral
May 2020Craig-HallumMaintainsHold
Feb 2020Piper SandlerMaintainsOverweight

View More Analyst Ratings for SSYS
View the Latest Analyst Ratings

 

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