Pricewaterhouse Cooper estimates 67% of manufacturers are already using 3-D printing. Of these, 28.9% are experimenting to determine how 3-D printing can be optimally integrated into their production processes, while 24.6% are using 3-D printing for prototyping.
The size of the global market, including 3-D printer sales, materials and associated services, is predicted to reach $16.2 billion by 2018, per independent research company Canalys. Further, top international data analyst Gartner has identified 3-D printing as one of the top 10 technology trends in 2016.
Gartner states that the growing range of 3-D printable materials will drive a compound annual growth rate of 64.1% for enterprise 3-D printer shipments through 2019. These advances will necessitate a rethinking of assembly line and supply chain processes to exploit 3-D printing. On top of this, other research firms are eyeing the space and offering some interesting projections for the very near term.
Printers that once cost $30,000 are now priced closer to $1,000 and have the potential to rewrite the rules of global manufacturing. Additive manufacturing will be an industry disruptor to many major industries, including medical equipment, healthcare, automotive, defense and even architecture. With a little bit of finesse recently, companies like General Electric (GE, Financial) and HP Inc. (HPQ, Financial) are targeting this space through acquisitions.
In late October, GE made a play on the space through a $599 million acquisition of German 3-D printing company Concept Laser. This new style of manufacturing produces parts with less of a workload than antiquated production systems, creates less scrap overall and increases capabilities for design immensely. This confirmed acquisition came shortly after the company failed to come to an agreement with Concept Laser rival SLM Solutions.
The major reason for this failure simply came down to the 20% owner of SLM, Elliott Advisors, rejecting GE’s offer for nearly $800 million. Considering this, it was reported that GE increased its bid for Swedish 3-D printer manufacturer Arcam. Ultimately, GE is looking to increase exposure to 3-D printing and additive manufacturing to enhance its position for its $25 billion jet-engine business.
This anticipated surge that 3-D printing is expected to see has also sparked others to take a first step. HP introduced its Jet Fusion 3-D printing solution earlier this year. They labeled it “the world’s first production-ready 3-D printing system.” Even though the failure to be an early adopter to this segment initially hurt HP, the company has quickly taken measures to remedy this. The Jet Fusion solution is aimed at being faster, simplified and hold higher quality in comparison to its competitors.
Then again, many would think that a company known for two-dimensional printing would have already been well behind this movement from the beginning. With other products like HP’s Sprout technology, this may not only be a commercial focus but a consumer one as well. Sprout is basically a 3-D scanning device that helps to simplify the printing process overall. It takes several 2-D images, stitches them together and spits out instructions for a desktop style printer to get the job done.
HP and GE are still a bit behind the ball. Although they are making strides, there have already been leaders established in the space. Companies like Stratasys (SSYS, Financial) and 3D Systems (DDD, Financial) continue to lead the market when it comes to the “3-D printing pure play.”
Stratasys is expected to release earnings this week and street estimates are already showing a speculative nature. This will be the first full quarter the newly appointed CEO, Ilan Levin, has held the position. Street expectations as of Oct. 28 show expected earnings per share of about five cents with revenue of roughly $174.5 million. This would represent a year over year growth of 400% based on EPS and 4.2% based on revenue projections. The first quarter launch of the company’s J750 brought a breath of fresh air to a somewhat stale story. The device became the world’s first multimaterial, full-color 3-D printer. Furthermore, this summer, the company announced it would be building ties with companies like Ford, Siemens and Boeing to enhance modeling-based 3-D printing technologies for different functions of production. Again, another situation where the greater focus is on commercial scale methods instead of a more novelty, consumer grade product.
That being said, the long-term approach to 3-D printing has proven to be a great payoff for investors. Not only for companies like Stratasys, but also 3D Systems. 3D Systems was one of the first to make a strong push into the arena, ahead of any initial hype. For instance, 3D Systems Inc.’s sales into design and manufacturing increased 27% from 2013 to 2014, growing to $609.8 million in sales. Sales into health care increased 80%, from $71.7 million in 2013 to $129.3 million in 2014.
Recently, the company reported earnings for the 3rd quarter, showing a rise to $156.4 million. That is a year over year growth increase of 3% compared to the same period in 2015. 3D Systems boasts a current cash position of nearly $180 million on hand. 3D Systems was trading at $1.25 before it shot up to nearly $100 per share in just a few years. Now the stock trades between roughly $14 to $20 per share.
Other companies that investors should look at are also in the small-cap space. Organovo Holdings (ONVO, Financial) and Heritage Printing Technology Corp. (HAGE, Financial) have had their fair share of milestones ahead of this boom in 3-D printing. Organovo, for instance, focuses on the biological applications that 3-D printing can offer. The company reported its fiscal second-quarter earnings results earlier this month. Even though they reported a net loss, total revenue increased nearly 360% in comparison to fiscal 2016. In addition, in comparison to the first quarter, second quarter revenues were up over 50%. The company only has two months behind it since commercialization and, per management, the company has “gained early traction of its kidney tissue.”
Since stutter-stepping earlier this month, share prices for Organovo have recovered significantly, to the tune of roughly 33%. Heritage Printing experienced its own spike in trading activity during October and November. Since hitting lows of 15 cents last month, share prices seem to be stabilizing above 20 cents over recent trading periods. Currently. the company is focused on the emerging Chinese market for 3-D printing and the anticipated increase in government expenditure that will be seen through 2020. Not only this, but many large-scale Chinese manufacturers have looked to 3-D printing as an alternative to older methods.
Foxconn, for instance, is completely changing its view on the sector. Terry Gou, Foxconn’s president, originally called 3-D printing “just a gimmick.” Now the company is targeting 3-D printing to enhance its research and deveopment and manufacturing processes. If you are not familiar with the Taiwan-based contract manufacturer, you may not need to look any further than the room around you. Notable products manufactured by the company include Blackberry phones, iPads, iPhones, Xbox One, Nokias and Playstations.
So, this is the bare-bones of it all. Three-dimensional printing could be starting to regain market interest and now it is not just 3-D printing-only companies spearheading that charge. Large organizations that once thought this was a gimmick industry are now coming into the space at full force. It may be only a matter of time until the next big wave of interest comes back into the 3-D printing and additive manufacturing industry. Just make sure you know what side to be on when it does.
Disclosure:The author owns ZERO shares in any stock mentioned.
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