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Stratasys (SSYS) to Boost 3D Printing Line With Origin Buyout
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Stratasys (SSYS - Free Report) recently inked an agreement to acquire Origin, a 3D printing start-up in a cash-and-stock deal worth $100 million. The company expects to complete the transaction by Jan 2021.
Per the terms of the deal, Stratasys will pay $60 million upfront and the remaining $40 million will be paid as performance-based earnouts over the next three years. The company intends to fund the transaction with cash of $55 million and $45 million in stock.
Rationale Behind Origin Acquisition
With the acquisition, Stratasys will gain access to Origin One, Origin’s manufacturing-grade 3D printer, which uses its proprietary resin-based Programmable PhotoPolymerization (P3) technology. The company believes that the technology can generate incremental annual revenues of $200 million within five years.
The integration will enable Stratasys to deliver polymer-based additive systems to dental, medical, tooling, and selected industrial, defense, and consumer goods market. It will further strengthen its footprint in the 3D-printed mass production parts market.
The company also revealed that its go-to-market organization will globally launch the product by mid-2021, which will be developed in conjunction with Origin’s team.
Although the acquisition is expected to have a dilutive effect on non-GAAP earnings in 2021, the integration will aid non-GAAP earnings growth by 2023.
Notably, dampened consumer demand for Stratasys’s hardware and consumables due to coronavirus outbreak remained an overhang on the company’s July-September quarterly results.
Product revenues declined 21.4% year over year to $83.5 million in third-quarter 2020. Within Product revenues, System revenues plunged 20.8% and Consumables revenues decreased 22% year over year.
Moreover, data cited by Stratasys from its internal analysis of the market indicates that the 3D-printing industry is likely to reach nearly $25 billion by 2025 and resin polymer-based additive systems is anticipated to experience an annual growth of 20% through 2020-2025.
Moreover, solid adoption of the company’s J750 Digital Anatomy 3D printers across healthcare institutions and medical service providers globally is a key positive. Further, enhancements to the printer such as ultra-realistic simulation and realism with advanced bone capabilities, is expected to attract new customers.
Additionally, strategic partnerships with automotive leaders such as Volkswagen, General Motors (GM - Free Report) and Ford Motors are expected to drive demand for the company’s 3D printing capabilities and fuel customer acquisition.
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Stratasys (SSYS) to Boost 3D Printing Line With Origin Buyout
Stratasys (SSYS - Free Report) recently inked an agreement to acquire Origin, a 3D printing start-up in a cash-and-stock deal worth $100 million. The company expects to complete the transaction by Jan 2021.
Per the terms of the deal, Stratasys will pay $60 million upfront and the remaining $40 million will be paid as performance-based earnouts over the next three years. The company intends to fund the transaction with cash of $55 million and $45 million in stock.
Rationale Behind Origin Acquisition
With the acquisition, Stratasys will gain access to Origin One, Origin’s manufacturing-grade 3D printer, which uses its proprietary resin-based Programmable PhotoPolymerization (P3) technology. The company believes that the technology can generate incremental annual revenues of $200 million within five years.
Stratasys, Ltd. Price and Consensus
Stratasys, Ltd. price-consensus-chart | Stratasys, Ltd. Quote
The integration will enable Stratasys to deliver polymer-based additive systems to dental, medical, tooling, and selected industrial, defense, and consumer goods market. It will further strengthen its footprint in the 3D-printed mass production parts market.
The company also revealed that its go-to-market organization will globally launch the product by mid-2021, which will be developed in conjunction with Origin’s team.
Although the acquisition is expected to have a dilutive effect on non-GAAP earnings in 2021, the integration will aid non-GAAP earnings growth by 2023.
Coronavirus-Led Disruptions Continue
Stratasys’s shares are down 5.6% year to date against the Zacks Computer - Peripheral Equipment industry’s rally of 43.6%.
Notably, dampened consumer demand for Stratasys’s hardware and consumables due to coronavirus outbreak remained an overhang on the company’s July-September quarterly results.
Product revenues declined 21.4% year over year to $83.5 million in third-quarter 2020. Within Product revenues, System revenues plunged 20.8% and Consumables revenues decreased 22% year over year.
Momentum in 3D Printing Industry to Revive Growth
According to Statista, the global 3D printing products and services market is expected to grow at a CAGR of 26.4% through 2020-2024 and will reach $40 billion by 2024.
Moreover, data cited by Stratasys from its internal analysis of the market indicates that the 3D-printing industry is likely to reach nearly $25 billion by 2025 and resin polymer-based additive systems is anticipated to experience an annual growth of 20% through 2020-2025.
This Zacks Rank #3 (Hold) company, along with its industry peers 3D Systems (DDD - Free Report) and HP Inc. (HPQ - Free Report) , stands to benefit from increased investments in 3D printing solutions for designing and product modeling. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, solid adoption of the company’s J750 Digital Anatomy 3D printers across healthcare institutions and medical service providers globally is a key positive. Further, enhancements to the printer such as ultra-realistic simulation and realism with advanced bone capabilities, is expected to attract new customers.
Additionally, strategic partnerships with automotive leaders such as Volkswagen, General Motors (GM - Free Report) and Ford Motors are expected to drive demand for the company’s 3D printing capabilities and fuel customer acquisition.
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Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
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