Considering the massive declines that 3D printing companies such as 3D Systems (DDD, Financial), ExOne (XONE, Financial), and Voxeljet (VJET, Financial) have seen in their stock prices so far this year, Stratasys (SSYS, Financial) is in a comparatively better shape. In fact, at the beginning of November, Stratasys has gained an impressive 21% in the last six months, eclipsing its peers in the industry.
Why Stratasys is in a better position
Now, the good part is that Stratasys focuses mainly on industrial 3D printing, and since this market is growing rapidly, there is a good chance that it will continue getting better. The company recently raised its annual revenue outlook from a range of $660 million to $680 million to a range of $750 million to $770 million, which indicates that it is gaining good traction in the market.
Additionally, Stratasys is growing profitably. The company has also raised its non-GAAP earnings guidance to the $2.25-$2.35 per share range from the earlier range of $2.15-$2.25 per share. In the long run as well, there are indications that Stratasys will continue improving. Let's see why.
Stratasys is focusing on improving its organizational structure, apart from investing in product and channel development. 3D printing and additive manufacturing solutions are disrupting enterprise processes and enabling the innovation, and creativity of customers across the globe by offering superior manufacturing processes and product development techniques.
As such, Stratasys is investing in projects that will influence key strategic decisions, including control over prototyping, continuously expanding direct digital manufacturing, the launch of innovative and unique vertical applications, accelerated delivery of fresh solutions to markets, enhancing the accessibility of 3D printing and improving customer service.
Impressive moves
Stratasys has also looked at acquisitions in order to improve its business. It has recently acquired Harvest Technologies and Solid Concepts, which are expected to add innovative growth opportunities for Stratasys. It plans to combine both the acquired companies with its current parts services business, called RedEye, for establishing a key strategic platform to fulfil its customers' additional manufacturing requirements. According to management, the integration of Harvest Technologies and Solid Concepts will allow for synergistic selling of systems and services throughout a greater joint customer base.
Additionally, Stratasys is focused on expanding its products and services to enable manufacturing processes for several industries and markets, along with enterprise development. Currently, Stratasys' systems are focused on delivering improved manufacturing applications such as the production of jigs, patterns, molds, and fixtures employed into the product assembly and manufacturing processes. For instance, the Objet500 Connex3 Color Multi-material 3D Printer delivers robust color, detail, prototypes, and multi-material concept models.
Moreover, Stratasys' focus on innovative product design and the successful execution of direct digital manufacturing to achieve superior ROI for customers will help it establish its presence in a growing industrial 3D printing market.
The education category is also another growth opportunity for the company, with several teaching institutes progressively using 3D printing technologies for attracting students.
Moreover, Stratasys is making additions to its distribution network in order to benefit from this expected growth. It has assigned Anatek as the first reseller of MakerBot in Central America, while TechData is distributing into North America, and Home Depot (HD, Financial) is running a pilot program for MakerBot fifth-generation 3D Printers in many stores. Stratasys recently acquired HAFNER’S BURO, its German-based MakerBot partner, to establish MakerBot Europe in an effort to shore up distribution in the continent.
Conclusion
Stratasys' focus on the industrial 3D printing market has helped the company do better than its peers this year, and gain some momentum on the stock market in recent times. Looking forward, the momentum is expected to continue due to Stratasys' smart moves. Analysts also expect the company to grow its bottom line at a CAGR of 20% in the next five years. Additionally, Stratasys has no debt, but has $578 million in cash. As such, the company can continue investing in its business, and acquire other companies as well, to sustain its growth, making it a good buy for the long run.
