Shares of Stratasys (SSYS, Financial) may be down 13.5% year-to-date as I type, but it soared in 2013, and Stratasys finished the year up almost 73%. Some investors of the company may be worried while those who go long can be always expect a rebound in the latter half of the current fiscal year. Various surveys and market analysis predicts the worldwide 3D printing business will grow from $2.5 billion in 2013 to $16.2 billion by 2018, achieving a CAGR of 45.7% in the figure period. Such market size and growth will leverage the growth of the company.
Stratasys is a business pioneer in 3D printing, and it has the major stake of the overall industry by number of installation in the business. This stake of the overall 3D printing markets is mainly due to its Makerbot division and targets home users. In any case, SSYS isn't just centered on the home, as the organization has modern/top of the line proficient equipped printers too, catering to industrial users.Â
Continues to deliver strong quarter
Stratasys recently posted its second quarter financial results for the current fiscal. Consolidated revenue for the second quarter of 2014 was $178.5 million, an increase of 67% compared with the same period a year ago; or up 35% when barring the effect of acquisitions. Non-GAAP net income for the second quarter was up by 51% over the same period a year ago to $28.0 million, or $0.55 for every diluted share.
The Makerbot brand contributed $33.6 million to Stratasys' second quarter revenue. The company also revealed it will aquire Solid Concepts and Harvest Technologies. Both arrangements have finished in the second from last quarter. In light of these acquisitions and other positive forces, Stratasys upgraded its full year direction.
Acquisitions to boost revenue
Stratasys acquired different growing companies that enabled it to establish a strong products and services portfolio. In the second quarter, it completed the acquisition of Solid Concepts and Harvest Technologies. This will help enable Stratsys to directly sell 3D printers to its clients, further increasing its client base. The client base of Solid ideas is spread over an extensive variety of verticals, including medicinal, aviation, and modern, among others. Both these organizations will be joined under Redeye which an on-interest is printing services focusing on modern clients. Both these organizations give comparable services as Redeye.
David Reis, chief executive officer of Stratasys said, "We look forward to enhancing our customer offering with the completion of this transaction. With Solid Concepts' deep knowledge of manufacturing and vertical focus, such as medical and aerospace, Stratasys will be even better positioned to meet our customers' evolving additive manufacturing requirements. We are delighted to welcome the talented employees of Solid Concepts to the Stratasys family and look forward to completing the acquisition of Harvest in order to form a leading strategic platform to better meet customers' needs."
Journey ahead
In light of the acquisitions in the second quarter, Stratasys redesigned its full year direction. The organization now figures revenue will come in the middle of $750 million and $770 million, up from $486.7 million last year and from past the previous direction of $660 million to $680 million. It expects non-GAAP net income to be between $117 million and $122 million, or $2.25 to $2.35 for every share. That looks at $1.84 of EPS a year ago and former direction for $2.15 to $2.25.
Final take
Looking at its solid development prospects of the 3D printing industry and SSYS' advantageous position in the space, I can foresee growth in the future. At a forward P/E ratio of 38, income is expected to grow at a CAGR of around 20%, which makes Stratasys a more sensible purchase to profit from 3D printing's development.
So in the event that you are searching for an organization that is looking incredible from an income point of view, is in a high development industry and is one of the few that isn't at a 52-week high at this time, consider SSYS. The organization may have a lot of room to run, and looks ready to make new highs.
To that end, Stratasys is best positioned to boost the technology's penetration of industrial and educational markets, and is recommended for Buy.
