Back to top

Image: Bigstock

3D Systems (DDD) Jumps 104% on Non-Core Software Asset Sale

Read MoreHide Full Article

Shares of 3D Systems (DDD - Free Report) soared 104.3% on Thursday after it announced the completion of the sale of its non-core software businesses and strong preliminary fourth-quarter 2020 results.

On Jan 7, the company revealed that it has closed the sale of its Cimatron and GibbsCAM businesses to a subsidiary of ST Acquisition Co., a Battery Ventures’ affiliate, on Jan 1 for a purchase price of $64.2 million. The amount excludes $8.9 million of cash amounts transferred to the buying entity.

According to management, the divestiture of the aforementioned business units will help the company realign its focus on its core business. The move is expected to bolster its market presence by providing reliable additive manufacturing solutions for applications in growing markets.

Repayment of Debt With Sale Proceeds

3D Systems has used a portion of the sales proceeds to pay off approximately $21 million of the outstanding balance under its senior secured term loan. Moreover, the company’s secured revolving credit facility remained fully undrawn and continues to be available for future fund-raising requirements.

Additionally, the company terminated the previously announced at-the-market equity program (ATM Program). No shares of common stock were sold under the ATM Program in the October-December quarter of 2020.

The company’s judicious use of the sale proceeds to pay off debt and terminate its ATM Program has rendered it debt-free, thereby strengthening its balance sheet.

Upbeat Preliminary Q4 Results

The 3D printing solution provider also issued overwhelming preliminary financial data for the fourth quarter of 2020. It expects to report fourth-quarter revenues between $170 million and $176 million, which is way higher than the current Zacks Consensus Estimate of $139.9 million.

Further, non-GAAP operating income is forecasted in the range of $11-$19 million. GAAP operating (loss) income is projected between a negative $8.6 million and a positive $0.5 million. The company had reported a non-GAAP operating income of $5.6 million and GAAP operating loss was $4.7 million in the year-ago quarter.

The consensus mark for adjusted earnings is currently pegged at 7 cents per share, which remained steady over the past 30 days and suggests growth of 40% from the year-ago quarter’s reported figure.

Notably, the company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed in the remaining one, the average surprise being 116.1%.

3D Systems’ strong preliminary fourth-quarter results come on the back of significant traction in its Healthcare and Industrial divisions despite the coronavirus-induced business disruptions. Moreover, fourth-quarter prelim results reflect second consecutive quarter of more than 20% revenue growth in both the business segments for the second consecutive quarter.

Zacks Rank & Other Stocks to Consider

3D Systems currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader technology sector are Jabil (JBL - Free Report) , Qualcomm (QCOM - Free Report) and Covetrus . All three companies carry a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Covetrus, Qualcomm and Jabil is currently pegged at 20.1%, 19.6% and 12%, respectively.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.

Click here for the 6 trades >>


Unique Zacks Analysis of Your Chosen Ticker


Pick one free report - opportunity may be withdrawn at any time


QUALCOMM Incorporated (QCOM) - $25 value - yours FREE >>

Jabil, Inc. (JBL) - $25 value - yours FREE >>

3D Systems Corporation (DDD) - $25 value - yours FREE >>

Published in