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Stratasys: This 3D Printing Stock Can Be A Good Long-Term Buy

May 10, 2014 | About:
jaggom

jaggom

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The stock of 3D printing company Stratasys (SSYS) has been dipping. The shares went down around 20% and the recent announcement by Hewlett-Packard (HPQ) to enter the 3D printing market has shaken investors' confidence in Stratasys. However, since Stratasys’ concentrates more on the industrial 3D printing segment worldwide, its market looks lucrative due to big industrial corporations that make use of its services and products.

Looking ahead

Stratasys is engaged in expanding its business worldwide. Hence, it’s strategically investing heavily in R&D, sales, and marketing to explore more business opportunities. Besides, the company has observed significant expansion in the market for 3D printing and additive manufacturing solutions globally. The reason behind Stratasys’ strong organic revenue growth can be attributed to strong broad-based demand across its entire product line, including the production series, design series, and the idea series of 3D printers.

Having noticed tremendous improvements in its performance globally, especially in the Asia-Pacific market, Stratasys looks focused to ramp up its sales and invest further in marketing that will help the company post better results in the ongoing quarter. Also, the company looks solid as it has strengthened its position in the market by improving functionality and affordability of its products. Moreover, Stratasys is focusing on its digital manufacturing business with many new products in the pipeline. Lastly, Stratasys is looking to improve the accessibility of 3D printing so as to increase its addressable market.

Strategic moves

Its new releases like the Objet500 Connex3 Color Multi-material 3D Printer have not only strengthened its product line, but also hopes and expectation in the Multi-Material 3D Printing business that will fetch comprehensively better results for the company in the coming quarters. Stratasys, hence, expects the printer’s triple jet technology, which allows users to combine color with a virtually unlimited combination of rigidity, flexibility, and transparency, to attract more users.

In addition, the company is coming up with new apps for the MakerBot replicator platform with unmatched speed, reliability, quality, and connectivity that will certainly increase its market share in the 3D printing business. Moreover, its technology is very user friendly and easy-to-use, and offers reliable desktop 3D printing platforms with its new apps and focuses to cover the full range of consumer, prosumer, and professional users.

Additionally to supplement growth in its product line, it has recently announced new PolyJet material for the Connex platforms, including Digital ABS2, which creates realistic, precise prototypes that are heat-resistant. The company anticipates better results from its new Connex3 Color 3D Printer that is combined with the three new color-enabling materials.

Moreover, its strategy to expand its business overseas in regions such as Singapore, Japan, and China looks lucrative. Also, Stratasys is looking for a solid start with its recently established and fully-owned subsidiary in Korea. In addition, Stratasys has also entered into a distribution agreement with Dell to provide MakerBot Replicator 3D printers bundled with Dell Precision Workstations for small and medium-sized businesses. This will definitely enhance the reach of Stratasys’ printers going forward.

Further, it’s very interesting to notice that Stratasys is seeing growth opportunities in the dental and medical fields as well, and to tap that market, it has announced the Objet Eden 260V Dental Advantage 3D printer and VeroGlaze dental material for Objet Eden V and OrthoDesk printers.

Overall, the company has performed significantly well and I think it will continue to perform well on the back of strategic investments in R&D investments, expansion plans, and entry into new market segments.

HP's move

But, investors must keep an eye on HP’s move into the 3D printing market as it sees strong growth opportunity here. Also, HP’s management is of the opinion that worldwide sales of 3D printers and related software and services will grow at a terrific pace to hit $11 billion by 2021. This will be a solid jump from just $2.2 billion two years ago.

Also, according to Reuters, HP CEO Meg Whitman believes that "HP's in-house researchers have resolved limitations involved with the quality of substrates used in the process, which affects the durability of finished products."

Therefore, Stratasys has to accelerate its business and ensure that its 3D printing offerings are cutting edge.

Conclusion

Overall, it can be said that Stratasys has been pretty solid so far and it should continue to perform well due to the various reasons that we saw above. While HP is indeed a threat, until and unless we know the extent of the threat, we shouldn’t discard HP. Going forward, growth in industrial 3D printing and Stratasys’ end-market growth should lead to a strong performance.


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