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What Makes Stratasys (SSYS) a Lucrative Takeover Target?
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Stratasys Limited (SSYS - Free Report) has been in the limelight over the past month after the company received an all-cash takeover proposal in early March this year from the Israel-based 3D printed electronics systems and additive manufacturing company, Nano Dimensions. However, the Minnesota-based 3D printing solution provider rejected the Israeli firm’s proposal, citing that the offer price substantially undervalues the company and is not in the best interests of Stratasys and its shareholders.
Since then, the two companies have been in a bitter fight. Nano has been taking all measures to acquire at least a controlling stake in the firm, while Stratasys’ board is trying to restrain it from doing so.
After the rejection of the first proposal of $18 per share in early March, Nano sweetened its offer in late March to $19.55 per share in cash. However, Stratasys’ board rejected the offer again on valuation reasons. Following that, the Israeli-based company again improved its offer to $20.05 per share and challenged to commence a special tender offer to acquire at least 51% stake if Stratasys rejects the offer.
In response, Stratasys rejected the offer again on the valuation front and leadership uncertainty within Nano. The company stated that the offer price of $20.05 per share in cash substantially undervalues its prospect in consideration of running as a standalone entity. SSYS is also uncertain about its prospect amid the ongoing power struggle within Nano. Stratasys disclosed that Nano and its CEO, Yoav Stern, are fighting in court with the Israeli company’s largest shareholder, Murchinson Ltd.
Murchinson wants Nano to remove its CEO and three other board members and appoint two new directors. Following a shareholder meeting on Mar 20, Murchinson revealed that 92% of Nano’s voting shareholders have approved the changes regarding the composition of the board.
With this, Nano, Stern and Murchinson are now involved in a litigation fight to decide who will lead the company. Therefore, Stratasys believes that the uncertainty regarding the leadership and decision-making authority of Nano’s board might expose its shareholders and other stakeholders to harmful spillover effects.
Despite multiple rejections, bitter statements against each other and a leadership struggle within the company, Nano is still keen on acquiring Stratasys. Therefore, the question arises – What makes Stratasys a lucrative takeover target?
Why Is Stratasys on the Takeover Radar?
We believe that Stratasys’ strong long-term growth prospects and attractive valuations make it a lucrative takeover target. SSYS has been scaling newer heights across all its business segments. It has been benefiting from an increase in the demand for 3D-printed materials and its focus on product launches, strategic partnership agreements and acquisitions.
Over the past few quarters, the company has inked strategic partnerships with the likes of Schneider Electric, The Boeing Co., Ford Motor Co., Siemens, Boom Supersonic and United Launch Alliance to fuel its growth momentum. Such collaborations help introduce advanced 3D printing technologies to the aerospace and automotive industries while expanding Stratasys’ geographic reach and driving its market penetration.
Also, Stratasys launched several innovative products, which position it well in the long term. Stratasys’ machines facilitate prototyping within a few hours, which reduces development time and upfront costs.
The 3D printing market presents a favorable long-term investment opportunity as a large number of engineers, designers, architects and entrepreneurs are resorting to 3D solutions for their primary designing and product modeling.
Per the Markets And Markets report, the global 3D printing market is expected to reach $34.5 billion by 2028 from $15 billion in 2023, representing a CAGR of 18.1% through the forecast period. Being one of the industry leaders in the 3D printing space along with its sustained focus on developing innovative products, Stratasys is likely to grab a large share of this market.
Additionally, last year’s broader market sell-off has turned Stratasys’ valuations attractive. Despite a year-to-date (YTD) gain of 27.1%, shares of SSYS are trading 31.8% lower than its 52-week high of $22.10 attained on Apr 21, 2022.
Moreover, the stock currently trades at a forward 12-month price-to-sales multiple of 1.60. This is significantly lower than the five-year high of 5.51 and the Zacks Computer-Peripheral Equipment industry’s average of 4.12.
Zacks Rank and Other Stocks to Consider
Currently, Stratasys carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Wix.com’s first-quarter 2023 earnings has been revised upward to 23 cents per share from a loss of 9 cents per share 60 days ago. For 2023, earnings estimates have been revised northward by 119.1% to $1.49 per share in the past 60 days.
Wix.com's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 225%. Shares of WIX have risen 16.4% YTD.
The Zacks Consensus Estimate for Zscaler's third-quarter fiscal 2023 earnings has been revised a penny northward to 39 cents per share in the past 30 days. For fiscal 2023, earnings estimates have been revised northward by 4 cents to $1.52 per share in the past 30 days.
Zscaler’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 29.7%. Shares of ZS have declined 10.2% YTD.
The Zacks Consensus Estimate for Adobe's second-quarter fiscal 2023 earnings has been revised upward by a penny to $3.78 per share over the past 30 days. For fiscal 2023, earnings estimates have moved upward by a penny to $15.41 per share in the past 30 days.
Adobe's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.6%. Shares of ADBE have soared 13% YTD.
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What Makes Stratasys (SSYS) a Lucrative Takeover Target?
Stratasys Limited (SSYS - Free Report) has been in the limelight over the past month after the company received an all-cash takeover proposal in early March this year from the Israel-based 3D printed electronics systems and additive manufacturing company, Nano Dimensions. However, the Minnesota-based 3D printing solution provider rejected the Israeli firm’s proposal, citing that the offer price substantially undervalues the company and is not in the best interests of Stratasys and its shareholders.
Since then, the two companies have been in a bitter fight. Nano has been taking all measures to acquire at least a controlling stake in the firm, while Stratasys’ board is trying to restrain it from doing so.
After the rejection of the first proposal of $18 per share in early March, Nano sweetened its offer in late March to $19.55 per share in cash. However, Stratasys’ board rejected the offer again on valuation reasons. Following that, the Israeli-based company again improved its offer to $20.05 per share and challenged to commence a special tender offer to acquire at least 51% stake if Stratasys rejects the offer.
In response, Stratasys rejected the offer again on the valuation front and leadership uncertainty within Nano. The company stated that the offer price of $20.05 per share in cash substantially undervalues its prospect in consideration of running as a standalone entity. SSYS is also uncertain about its prospect amid the ongoing power struggle within Nano. Stratasys disclosed that Nano and its CEO, Yoav Stern, are fighting in court with the Israeli company’s largest shareholder, Murchinson Ltd.
Stratasys, Ltd. Price and Consensus
Stratasys, Ltd. price-consensus-chart | Stratasys, Ltd. Quote
Murchinson wants Nano to remove its CEO and three other board members and appoint two new directors. Following a shareholder meeting on Mar 20, Murchinson revealed that 92% of Nano’s voting shareholders have approved the changes regarding the composition of the board.
With this, Nano, Stern and Murchinson are now involved in a litigation fight to decide who will lead the company. Therefore, Stratasys believes that the uncertainty regarding the leadership and decision-making authority of Nano’s board might expose its shareholders and other stakeholders to harmful spillover effects.
Despite multiple rejections, bitter statements against each other and a leadership struggle within the company, Nano is still keen on acquiring Stratasys. Therefore, the question arises – What makes Stratasys a lucrative takeover target?
Why Is Stratasys on the Takeover Radar?
We believe that Stratasys’ strong long-term growth prospects and attractive valuations make it a lucrative takeover target. SSYS has been scaling newer heights across all its business segments. It has been benefiting from an increase in the demand for 3D-printed materials and its focus on product launches, strategic partnership agreements and acquisitions.
Over the past few quarters, the company has inked strategic partnerships with the likes of Schneider Electric, The Boeing Co., Ford Motor Co., Siemens, Boom Supersonic and United Launch Alliance to fuel its growth momentum. Such collaborations help introduce advanced 3D printing technologies to the aerospace and automotive industries while expanding Stratasys’ geographic reach and driving its market penetration.
Also, Stratasys launched several innovative products, which position it well in the long term. Stratasys’ machines facilitate prototyping within a few hours, which reduces development time and upfront costs.
The 3D printing market presents a favorable long-term investment opportunity as a large number of engineers, designers, architects and entrepreneurs are resorting to 3D solutions for their primary designing and product modeling.
Per the Markets And Markets report, the global 3D printing market is expected to reach $34.5 billion by 2028 from $15 billion in 2023, representing a CAGR of 18.1% through the forecast period. Being one of the industry leaders in the 3D printing space along with its sustained focus on developing innovative products, Stratasys is likely to grab a large share of this market.
Additionally, last year’s broader market sell-off has turned Stratasys’ valuations attractive. Despite a year-to-date (YTD) gain of 27.1%, shares of SSYS are trading 31.8% lower than its 52-week high of $22.10 attained on Apr 21, 2022.
Moreover, the stock currently trades at a forward 12-month price-to-sales multiple of 1.60. This is significantly lower than the five-year high of 5.51 and the Zacks Computer-Peripheral Equipment industry’s average of 4.12.
Zacks Rank and Other Stocks to Consider
Currently, Stratasys carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector are Wix.com (WIX - Free Report) , Zscaler (ZS - Free Report) and Adobe (ADBE - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Wix.com’s first-quarter 2023 earnings has been revised upward to 23 cents per share from a loss of 9 cents per share 60 days ago. For 2023, earnings estimates have been revised northward by 119.1% to $1.49 per share in the past 60 days.
Wix.com's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 225%. Shares of WIX have risen 16.4% YTD.
The Zacks Consensus Estimate for Zscaler's third-quarter fiscal 2023 earnings has been revised a penny northward to 39 cents per share in the past 30 days. For fiscal 2023, earnings estimates have been revised northward by 4 cents to $1.52 per share in the past 30 days.
Zscaler’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 29.7%. Shares of ZS have declined 10.2% YTD.
The Zacks Consensus Estimate for Adobe's second-quarter fiscal 2023 earnings has been revised upward by a penny to $3.78 per share over the past 30 days. For fiscal 2023, earnings estimates have moved upward by a penny to $15.41 per share in the past 30 days.
Adobe's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.6%. Shares of ADBE have soared 13% YTD.