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Slowdown In 3D Printing Demand Has Piper Jaffray Downgrading Stratasys

There is likely to have been a significant slowdown in system demand in the June quarter, Piper Jaffray’s Troy D. Jensen said in a report. He downgraded the rating on Stratasys, Ltd. SSYS 10.07% from Overweight to Neutral, while reducing the price target from $32.00 to $24.

Q2 checks and results from a 3D printing survey with Stratasys channel partners indicate a meaningful slowdown in system demand. Analyst Troy Jensen added, “Although our checks sounded modestly better than our conversation with 3D Systems VARs, the overall tone remained extremely negative and system demand has seemed to have hit a recent low.”

3D Printing Survey Results

The survey indicated that 17 percent of Stratasys resellers experienced an above-plan quarter, while 61 percent recorded disappointing results.

“We believe the weakness was spread across the company’s entire portfolio, and system growth in each product category slowed for the third consecutive quarter,” Jensen wrote. He added that the slowdown not only continued to stem from excess capacity that had been built over the last few years, but also resulted from the entrance of HP Inc HPQ 0.79% as well as other domestic and international macro uncertainties.

Estimates Reduced

The revenue estimate for Q2 has been lowered by $1.8M to $170.0M. The analyst commented that there could be further downside risk, given the extremely poor demand indicated by the checks. The revenue estimate for 2016 has been reduced by $15.0M to $700M.

The sales and EPS estimates for 2017 have been reduced by $36.6M to $750M and from $0.90 to $0.70, respectively.

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Jul 2016Piper JaffrayDowngradesOverweightNeutral
May 2016FBR CapitalInitiates Coverage onOutperform
May 2016FBR CapitalInitiates Coverage onBuy

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