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Will 3D Systems' Turnaround Plan Help to Boost the Stock?
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Leading 3D printer maker 3D Systems Corporation (DDD - Free Report) seems to be well on track with its 3-step turnaround plan, which aims to channelize its resources into more lucrative areas in professional and industrial markets.
Successful implementation of the strategy will also likely boost the company’s stock price, which has plunged 37% in the past year.
The recently appointed CEO, Vyomesh Joshi, disclosed in the company’s quarterly earnings call that 3D Systems will initially focus on improving quality and reliability of its operations, and will rationalize and optimize its supply chain. To this end, the company has already begun to implement changes in its planning and procurement processes for superior inventory management, and plans to execute cost-control strategies as well.
The second step would be to craft a market-based strategy which will focus on identifying industries and end users to which 3D Systems’ technology can provide a sustained advantage. This strategy will then act as the focal point, around which the company will be able to define and build its operating model.
The third and final step in the turnaround of this company would be creating a robust organizational structure that will support the strategy and enable 3D Systems to capitalize on the incredible opportunities that the market offers.
In fact, according to a recent regulatory filing, the company’s Chief Operating Officer Mark Wright and Chief Merchandising Officer Cathy Lewis have both resigned from their positions. The resignations seem to be part of management’s strategy to restructure the company under its new leader.
Similar to other 3D printing companies, 3D Systems has struggled with execution and performance in recent years.
Over the past few quarters, the company has been experiencing unfavorable broader market conditions that have badly hit its financial performance. It is grappling with a strong volatility in macroeconomic factors such as economic slowdown, inflation, currency fluctuations, commodity prices and credit availability. These conditions continue to impact the company’s performance negatively.
3D Systems is taking initiatives to channelize its resources into more lucrative areas in professional and industrial markets. 3D Systems also conducted numerous successful product launches and strategic deals, which could help it to combat these persistent challenges in the near future.
Also, 3D Systems’ healthcare business is showing strong performance, driven by a rising demand from customers who print medical and dental devices. The company is also focusing on enhancing its existing 3D printers line, reinforcing partnerships and boosting productivity.
We believe that these initiatives, coupled with 3D Systems’ 3-step turnaround plan, might just turn the fortunes around for the company.
3D Systems currently has a Zacks Rank #5 (Strong Sell), but that can change given the positive estimate revisions it is seeing of late. Over the past month, the Zacks Consensus Estimate for 2016 earnings has moved up from 7 cents to 9 cents per share.
Some better-ranked stocks in the broader computer & technology sector include Key Tronic Corp. (KTCC - Free Report) , TransAct Technologies Incorporated (TACT - Free Report) and Zix Corporation . Each of these stocks holds a Zacks Rank #2 (Buy).
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Will 3D Systems' Turnaround Plan Help to Boost the Stock?
Leading 3D printer maker 3D Systems Corporation (DDD - Free Report) seems to be well on track with its 3-step turnaround plan, which aims to channelize its resources into more lucrative areas in professional and industrial markets.
Successful implementation of the strategy will also likely boost the company’s stock price, which has plunged 37% in the past year.
The recently appointed CEO, Vyomesh Joshi, disclosed in the company’s quarterly earnings call that 3D Systems will initially focus on improving quality and reliability of its operations, and will rationalize and optimize its supply chain. To this end, the company has already begun to implement changes in its planning and procurement processes for superior inventory management, and plans to execute cost-control strategies as well.
The second step would be to craft a market-based strategy which will focus on identifying industries and end users to which 3D Systems’ technology can provide a sustained advantage. This strategy will then act as the focal point, around which the company will be able to define and build its operating model.
The third and final step in the turnaround of this company would be creating a robust organizational structure that will support the strategy and enable 3D Systems to capitalize on the incredible opportunities that the market offers.
In fact, according to a recent regulatory filing, the company’s Chief Operating Officer Mark Wright and Chief Merchandising Officer Cathy Lewis have both resigned from their positions. The resignations seem to be part of management’s strategy to restructure the company under its new leader.
Similar to other 3D printing companies, 3D Systems has struggled with execution and performance in recent years.
Over the past few quarters, the company has been experiencing unfavorable broader market conditions that have badly hit its financial performance. It is grappling with a strong volatility in macroeconomic factors such as economic slowdown, inflation, currency fluctuations, commodity prices and credit availability. These conditions continue to impact the company’s performance negatively.
3D Systems is taking initiatives to channelize its resources into more lucrative areas in professional and industrial markets. 3D Systems also conducted numerous successful product launches and strategic deals, which could help it to combat these persistent challenges in the near future.
Also, 3D Systems’ healthcare business is showing strong performance, driven by a rising demand from customers who print medical and dental devices. The company is also focusing on enhancing its existing 3D printers line, reinforcing partnerships and boosting productivity.
We believe that these initiatives, coupled with 3D Systems’ 3-step turnaround plan, might just turn the fortunes around for the company.
3D Systems currently has a Zacks Rank #5 (Strong Sell), but that can change given the positive estimate revisions it is seeing of late. Over the past month, the Zacks Consensus Estimate for 2016 earnings has moved up from 7 cents to 9 cents per share.
Some better-ranked stocks in the broader computer & technology sector include Key Tronic Corp. (KTCC - Free Report) , TransAct Technologies Incorporated (TACT - Free Report) and Zix Corporation . Each of these stocks holds a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>