TDSC Upped from Sell

Zacks senior manufacturing sector analyst Steve Biggs, CFA has upgraded the shares of 3D Systems Corporation (TDSC), a provider of rapid 3-D printing, prototyping, and manufacturing solutions from Sell to Hold. Here are some of the reasons why:

"3D Systems has clearly turned the corner, posting revenue growth in Q3 and its first quarterly profit since 2005. A growing installed base of new systems has carried through to accelerating materials sales, which carry a higher profit margin. Concerns over the new V-Flash Modeler have pressure the stock over the past few weeks. However, we feel that further downside is limited.

"We believe that much of 3D Systems future success will hinge on new systems, such as the V-Flash Desktop Modeler, launched in the third quarter of 2007. Although concerns about delays in the V-Flash were perhaps responsible for a recent decline in the stock price, we believe that much of the downside risk is diminished at this point. TDSC is currently benefiting form past restructuring efforts, as the company posted increased revenues and returned to profitability during the third quarter of 2007 from sequential declines and losses in previous quarters.

"However, with an extremely competitive environment, the company will be hard pressed to return to strong growth. This represents a P/S multiple of approximately 2x our 2008 revenue estimate of $8.00 per share, although a premium valuation to the industry this is still a discount to the S&P 500. We, therefore, upgrade the shares of TDSC to Hold from Sell with a price target of $16."

Read the full analyst report on TDSC

Read the full analyst report on TDSC