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Bear of the Day: 3D Systems (DDD)

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A big name in the 3D-printing market for over 30 years, 3D Systems Inc. (DDD - Free Report) is a leading provider of 3D modeling, rapid prototyping, and manufacturing solutions.

The company’s systems and materials reduce the time and cost of designing products, and they facilitate direct and indirect manufacturing by creating parts directly from digital input.

3D Systems has a notable healthcare business, and its precision healthcare capabilities include simulation, Virtual Surgical Planning, and printing of medical and dental devices as well as patient-specific surgical instruments

Disappointing Q3 Earnings

When 3D Systems reported third-quarter results recently, it marked the company’s third consecutive earnings miss. DDD reported a loss of 34 cents per share, not even coming close to the Zacks Consensus Estimate of 5 cents per share; EPS also fell 78.9% year-over-year.

Revenues of $153 million also missed our consensus estimate and declined 2.2% from the prior year period.

Overall, there was steady demand for the company’s healthcare solutions and industrial offerings. Strength in the EMEA region was more than offset by softer revenues in the Americas and the Asia-Pacific region.

However, 3D Systems withdrew its full-year 2017 guidance in light of the company’s decision to conduct an extensive review of inventory based on year-to-date demand, customer data, and market trends.

The Road Ahead

Even though 3D Systems can boast steady momentum in its healthcare offerings, solid demand for its production printers and materials, and higher efficiency in “demand manufacturing services,” the road ahead is going to be a bumpy one.

After the company reported earnings, about five or so firms announced downgrades on DDD, cut their price targets, or both. DDD is currently a #5 (Strong Sell) on the Zacks Rank.

Current quarter estimates anticipate earnings to decrease over 86%. And for the current year, Zacks expects 3D Systems’ earnings to decline almost 110%. Eight analysts have revised their estimates downwards in the last 30 days compared to none higher.

The company has an average earnings surprise of -83.8%.

Shares Down on the Year

So far in 2017, shares of 3D Systems have dropped nearly 35% compared to the S&P 500’s gain of about 15%.

3D Systems Corporation Price, Consensus and EPS Surprise

3D Systems Corporation Price, Consensus and EPS Surprise | 3D Systems Corporation Quote

The stock has really underperformed when you compare it to its industry, Computer-Mini Computers, which has returned almost 53% this year.

With a forward P/E of 15.46 and price-to-sales of 1.59, though, 3D Systems sits on par with its industry value-wise.

For investors looking for a 3D-printing stock with more growth potential, they should consider HP Inc. (HPQ - Free Report) . A #2 (Buy) on the Zacks Rank, HP is surging into the space with its new Jet Fusion 3D printers, and could soon introduce 3D metal printers as well.

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