Part of the issue with the 3D-printer sector over the last year was the impending threat of HP (NYSE:HPQ) (NYSE:HPE). The giant technology company promised a revolutionary printer that was both faster and cheaper. The end result was a sales slowdown in the sector as customers regrouped to analyze the technology roadmap of the sector participants.
Due to the lengthy delay from announcement to production sometime later this year, HP is losing out to market participants like Stratasys (NASDAQ:SSYS) that have delivered printers with new technologies including the new industrial printer released on Monday. The question now is whether the new printer is a game changer for the industry.
Game Changer
Stratasys released the J750 that it claims is the first 3D printer to produce full color, multi-material prototypes and parts in a single print. The printer has 360,000 different color shades along with multiple material options. The J750 saves time by eliminating the consuming time typically needed to paint and assemble the end product.
According to the website Digital Editions, the printer offers the following upgrades over the previously popular Objet Connex3 500 3D printer:
- 2x the material capacity
- 4x the number of jets
- 2x the speed
- smaller layer thickness
The March 2016 3D Printing Trends report from 3D Hubs shows that other Objet printers are the hot items. The Connex 500 is listed as a Top 10 printer for the first time showing how a PolyJet machine capable of printing multi-materials on multi-colors was already climbing the top list.
Source: 3D Hubs
The remaining question is whether the printer is enough of a game changer to impact revenues and sales if the machine it replaces wasn't a top five industrial printer.
Value Impacting?
While the new J750 printer looks like disruptive technology that is a leap forward in productivity and cost savings. As an example, design firm Synergy lists the savings on a prototype as significant in terms of both cost and time. The question is really how this printer impacts the stock.
(click to enlarge)
Source: Stratasys press release
The stock has seen a significant rebound including a nearly 9% gain on the new printer news. The stock now trades at roughly 2x revenues suggesting the valuation is more inline with a rebounding market for 3D printers.
Investors clearly missed the big rally already as the stock got too negative. Regardless, the earnings trend has now turned positive over the last 60 days so the stock is likely to rally going forward.
Source: Yahoo Finance
Takeaway
The key investor takeaway is that the printer news probably isn't a reason to get carried away with the stock. Stratasys depends on several different models to produce annual revenues of $700 million including other printers that were rated higher by customers.
As my previous research highlighted, the trend is now bullish for Stratasys and the 3D-printer sector. Anybody following the recommendation last month to buy on dips would've bought the stock when it traded multiple times in the $22s. The stock likely trades up to $30 now before again the recommendation is to buy on dips instead of chasing the stock. If Stratasys does break $30, the stock is likely off to the races as HP becomes a distant memory in the sector.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.
Source → Stratasys: Game Changing Printer?
