3D Systems Is on the Path to $28. Why It’s Time to Buy DDD Stock & Other 3D Printing Stocks.
What Happened to the 3D Systems Stock Price Today?
3D printing leader 3D Systems (NYSE:DDD) reported blowout first quarter numbers, and investors cheered the results by sending DDD stock up more than 15%.
•The blowout earnings report and subsequent stock price jump does little to “fix” what has been a broken stock for months now. From its early 2021 highs, DDD stock is still off more than 50%.
•We think recent weakness is a great buying opportunity, and that the big rebound in 3D printings stocks starts now.
-Why It Happened
•3D Systems’ first quarter earnings reports was stellar. In short, it was a huge double-beat quarter with accelerating revenue growth and improving margins.
•On the top-line, analysts were looking for essentially flat revenue growth, following just 2% revenue growth in the fourth quarter of 2020. But revenues smashed estimated, and rose 8% year-over-year. On an organic basis ex certain business divestitures, revenues rose an impressive 17% year-over-year.
•The healthcare business is booming (up 36%). The industrial business is recovering with the economy (organic industrial sales were up 1%).
•On the bottom-line, 3D Systems smashed expectations by even more.
•Strong top-line performance and demand flowed through into stronger-than-expected pricing and healthy gross margins. Gross margins clocked in at 44%, up from 42% both a year ago and last quarter.
•Strong top-line performance also coupled with strict expense control to spark huge EBITDA margin expansion. Adjusted EBITDA margins were 13.2% in the quarter. A year ago, they were sitting at just 1.6%.
•Analysts were expecting just two cents for EPS on the bottom-line. 3D Systems reported a number nearly 9X that big at 17 cents.
•It was an amazing quarter. DDD stock surged in response.
-Does It Matter?
•This print matters in more ways than one.
For 3D Systems, it matters because it shows that this company is, indeed, on a rebounding growth trajectory that is causing meaningful improvements in revenues, margins, and profits. That’s a huge win for DDD stock.
For the broader 3D printing industry, it matters because it shows that all the hype in this space that emerged in late 2020 was not overstated. It was legit, as it is being backed up in early 2021 by very strong numbers. Growth in this space is unequivocally and rapidly accelerating, as 3D printing functionality goes up and costs come down, to a point where these machines are ready to redefine manufacturing everywhere.
That’s a huge win for other 3D printings stocks, like Stratasys (NASDAQ:SSYS) and ExOne (NASDAQ:XONE).
-DDD Stock Price Forecast
We think 3D printings stocks are ready to rebound after a big lull over the past few months.
This rising tide will lift all boats, DDD stock included.
The consensus analyst price target on DDD stock is $28.
We see no reason why shares can’t or won’t rally toward that level over the next 12 months.
The once sleepy and left-for-dead 3D printing industry is ready to wake up and sprint into hypergrowth mode over the next decade.
For years, 3D printing was too slow, too expensive and too niche to be useful. Unless you consider small-scale, one-off prototyping as useful. The industry, though, has made huge technical advancements over the past several years. Today, 3D printers are printing faster than ever. This thanks to more efficient layer-by-layer printing technology. A byproduct of which is that they are becoming very affordable, as manufacturing processes have been streamlined, economics of scale has kicked in and material costs have plummeted. Most importantly, they are now able to print in metal (as opposed to just plastic), which makes them immediately usable on the factory floor.
The result is that more and more companies are incorporating rapid, cost-effective, metal 3D printing capabilities into their actual assembly lines. It’s the beginning of the long-overdue 3D Printing Revolution.
This industry is at a critical inflection point. It’s been a no-growth market for several years. Now, over the next few years, it’s going to transform into a sustainable 20%-plus growth market as a new generation of fast and affordable metal AM machines make their way onto factory floors everywhere, printing end-use parts for cars, planes, rocket-ships, medicine, and more.
We think these stocks could soar more than 10X in the coming years as they lead the world into a new of digital and on-demand manufacturing.
[3D Systems Is on the Path to $28. Why It’s Time to Buy DDD Stock & Other 3D Printing Stocks.