Stratasys SSYS stock plunged 5.2% on Thursday after the company revealed that underwriters have exercised their option to buy additional shares under the previously announced public offering of ordinary shares. Underwriters’ action would result in the dilution of the 3D hardware and solution provider’s earnings per share.
Stratasys discloses that underwriters bought an additional 1,034,482 shares for $29.00 per share, resulting in gross proceeds of approximately $30 million for the company. With this, the company has raised about $230 million from the recently concluded public offering.
Notably, it had underwritten a public offering of 6,896,552 of its shares for $29.00 per ordinary share. The gross proceeds from the offering were expected to be around $200 million. Additionally, it has provided underwriters a 30-day option to buy an additional 1,034,482 shares.
For the offering,
JPMorgan Chase & Company JPM and Stifel Financial Corporation SF have acted as lead book-running managers, while Morgan Stanley ( MS Quick Quote MS - Free Report) acted as a book-running manager.
Although the latest public offering will be dilutive to Stratasys’ earnings per share, it would enhance the company’s financial flexibility and help it in funding growth initiatives.
Over the last year, the company has been investing aggressively toward expanding its product portfolio, particularly in the polymer 3D printing space. In connection with this, the company, in January 2020, acquired Origin, a San Francisco-based 3D printing start-up.
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.
Additionally, it bought RP Support (RPS), a U.K.-based based provider of stereolithography 3D printers and solutions, in February this year. The acquisition is likely to broaden Stratasys’ polymer 3D printing portfolio. In its press release, Stratasys stated that
RPS’s complementary technology will further expand its “polymer suite of solutions across the product life cycle, from concept modeling to manufacturing.”
Moreover, in December 2020, Stratasys introduced several product capabilities to aid 3D printing. It launched the application programming interface (API) program, which facilitates API connectivity between the company’s Fused Deposition Modeling 3D printers and enterprise software applications, using the GrabCAD Software Development Kit.
We believe that the expansion of Stratasys’ robust 3D printing portfolio along with the recent acquisitions of Origin and RPS will drive customer acquisition for the company, thereby, boosting its growth prospects in the near term.
Stratasys currently carries a Zacks Rank #4 (Sell).
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