As originally reported by Investor’s Business Daily, shares of Stratasys jumped Tuesday after the 3D printer maker was upgraded to overweight from neutral at prestigious stock analyst firm Piper Jaffray, based on the view that 3D printing stocks and industry demand trends are improving after a long slowdown.
Analyst Troy Jensen said that the company “believe it is time for investors to revisit the 3D printing space.” Jensen is a managing director and senior research analyst at Piper Jaffray, specializing in high growth technology stocks. Jensen’s coverage universe includes networking technologies, 3D printing and robotics.
Jensen, in a research note Tuesday, said Stratasys is outperforming 3D Systems (DDD) and other 3D printer manufacturers. Based on a Piper survey of 3D printer resellers, Stratasys experienced “a meaningful uptick in system demand for the second consecutive quarter,” Jensen wrote. He said many resellers say they are entering 2017 with a solid pipeline, “and are upbeat that this year will be a better one for system sales vs. 2016.”
In addition to the overweight rating on Stratasys, Jensen raised his price target to 28 from 21. Stratasys stock jumped 11.6% to 23.77 in the stock market today. 3D Systems was up 2.7% at 15.28. Jensen thinks the 3D printing industry saw an uptick in product demand during the last two quarters and that improvements at Stratasys are “one of the underlying reasons for the demand.”
The improving demand environment seems to be benefiting Stratasys more than 3D Systems, he wrote. “But we also believe companies like Materialise, Proto Labs, Voxeljet and a host of emerging startups are also seeing better demand trends,” Jensen wrote.
Of 3D Systems, Jensen wrote, “While 3D Systems is making some improvements, we believe the challenges are still significant and competition is intensifying.” He reiterated an underweight rating on 3D Systems. “We do not believe the uptick in demand was consistent across all vendors or 3D printing technologies,” he said.
3D printer sales decelerated in 2016, hampered by a slowdown at 3D Systems and Stratasys , the two industry leaders by revenue. All 3D printing stocks are very far from their highs of 2014 and perfromance is still weak by a number of metrics however many 3D printing companies are registering growing demand as industry awareness increases and technologies offer constantly improving performances. According to Wohlers Report 2017, 3D printer sales grew 17.4% to $6.06 billion in 2016. That’s down from 26% growth in 2015.
Stratasys and 3D Systems face increased competition from giants such as HP and General Electric (GE). HP announced it would make its long-awaited entry into the 3D printer market last year. Also last year, General Electric purchased two European metal 3D printing companies; it also has developed jet engine technology via 3D printing.
“Although HP’s launch date has likely been pushed out, we believe HP and their Jet Fusion technology will have a big impact on the industry, as well as on Stratasys’ and 3D Systems’ channels,” Jensen wrote.