3D Systems: This Stock Can Provide Good Returns In Long

Author's Avatar
Mar 26, 2015

The market size of 3D printing is mammoth. Market analysts expect this market to reach $8.43 billion by 2020, at a CAGR of 14.37% between 2014 and 2020.The demand for this technology of 3D printing has been constantly rising as its application finds space in a wide range of end user applications catering to various business sectors. 3D Systems (DDD, Financial) is one of the leading players in the 3D printing business and is all set to ride on this high demand wave. The stocks of this company might have failed to impress the investors, as it dipped this year, but this can be the right time to invest in this company when it’s all low and can rebound. The company is strategizing toward taking 3D printing to a completely new level by expanding its reach and adaptability across various industries.

Acquisition for future growth

The company is expanding its business with various acquisitions to fortify its operational efficiency with a stronger grip on this market. The company is ranked 13 on Forbes’ list of most-innovative growth companies and has made its way up the ranks mainly through a series of acquisitions.

Last month, 3D Systems completed the acquisition of Cimatron Ltd for which it paid a price of around $97 million, acquisition also includes Cimatron’s net cash. Cimatron provides CAD/CAM software solutions to the various manufacturing industries, mainly tooling. This acquisition further extends the sales coverage for the company with cross selling of the allied products. This acquisition can further strengthen the cash generation possibilities for the company and Non-GAAP earnings per share for the fiscal 2015.

In the previous quarter the company completed the acquisition of Robotec, an additive manufacturing company. This acquisition also strengthens its footprints in Latin America.

Focused on healthcare

The 3D printing market for healthcare is anticipated to reach $4.04 billion by 2018. 3D Systems is not leaving any stone unturned to have a firm grip on this huge market. The company is already working with the federal government to enhance the delivery of U.S. healthcare and drive innovation for novel therapies while reducing overall healthcare costs. 3D Systems has unwrapped Simbionix ARTHRO Mentor Training Modules for Hip and Knee Procedures. This will offer surgeons more detailed ways to diagnose and get trained with the 3D printing innovations.

The company is focused on developing an end-to-end Digital Thread for Personalized Surgery and is the only company that offers healthcare-centric 3D printing and 3D visualization technology. The digital surgical tools include accurate 3D printed anatomical models; advanced virtual reality simulators; direct metal printing for implants and instrumentation; and personalized 3D printed surgical guides.

Journey ahead

Consensus of analysts foresees 25% growth of this company by next year. For the next five years, analyst estimate growth of 25.65% every year. This growth, again, is much higher than the industry growth of 15.7% and sector growth of 18.32% every year for the next five years.

Consensus of analysts also expects revenue to cross the $1 billion mark and will be around $1.06 by 2016. The company has been making various acquisitions and such acquisition will influence the revenue to meet the expectation of the analysts by 2016.

Conclusion

Considering the company’s acquisition policy to strengthen its business, its future looks much better. The company is also focused on various growth areas in 3D printing which can provide growth momentum for the company. The company also has a strong footprint in the 3D printing market and is one of the leaders among 3D printers’ manufacturers. Considering that, I feel the company's future is quite bright and an investor should consider including this stock in their portfolio.