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Stratasys (SSYS) Provides Estimates for Desktop Metal Merger
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Stratasys (SSYS - Free Report) recently filed a preliminary Form F-4 with the United States Securities and Exchange Commission and provided revenue and EBITDA estimates for its proposed combination with Desktop Metal, Inc. (DM - Free Report) .
The combination will have Desktop Metal’s advanced technology for metal mass production along with Stratasys’ robust polymer solutions and operational capabilities. Stratasys’ total addressable market for manufacturing is likely to double by 2027 with Desktop Metal’s high-growth metals portfolio. This combination will significantly improve SSYS offerings in the rapidly growing dental vertical, which comprises 35% of Desktop Metal’s business and has an expected market growth rate of 30% from 2022 to 2027.
Moreover, Desktop Metal’s strong intellectual property across applications will allow the combined company to have more than 3,400 active patents, pending patent applications and one of the largest research & development and engineering teams in the industry with over 800 scientists and engineers. The combined company will have more than 27,000 industrial clients across industries and applications.
The combined company is expected to generate revenues of more than $1.6 billion and EBITDA of over $300 million in 2026 at base case against a 20% pro forma EBITDA margin. This suggests a top-line compound annual growth rate (CAGR) of 19% from 2022 to 2026 compared with 14% CAGR for standalone Stratasys over the forecast period. The estimates consist of $50 million in run-rate cost synergies and $50 million in run-rate revenue synergies, which are expected to be completely realized by 2025. In case of a downside, the combined company is expected to generate revenues of more than $1.4 billion and EBITDA of over $200 million in 2026 against a 14% pro forma EBITDA margin.
Per the terms of the agreement, Desktop Metal shareholders will receive 0.123 ordinary shares of Stratasys for each share of Desktop Metal Class A common stock. The transaction is subject to customary closing conditions, including the approval of both Stratasys and Desktop Metal stockholders and the receipt of certain governmental and regulatory approvals. It is likely to close in fourth-quarter 2023.
Stratasys 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 and strategic partnership agreements or acquisitions.
In April, Stratasys signed a joint development and commercialization agreement with Israel-based regenerative medicine company, CollPlant Biotechnologies, to develop a solution that bio-fabricates human tissues and organs. In late March, SSYS announced that it received an order from its existing customer, Gotz Maschinenbau, for four of its high-speed H350 3D printers.
Last month, the company reported better-than-expected results for the first quarter of 2023. Its first-quarter revenues of $149.4 million surpassed the Zacks Consensus Estimate of $142.2 million. Moreover, Stratasys reported non-GAAP earnings of 2 cents per share, while the consensus mark was pegged at a loss of 8 cents per share.
Zacks Rank & Stocks to Consider
Stratasys carries a Zacks Rank #3 (Hold), while Desktop Metal has a Zacks Rank #2 (Buy) at present. Shares of SSYS and DM have lost 7.5% and 12.2%, respectively, in the past year.
The Zacks Consensus Estimate for Meta Platforms' second-quarter 2023 earnings has been revised downward by 5 cents to $2.82 per share over the past 30 days. For 2023, earnings estimates have moved north by a penny to $11.94 in the past seven days.
META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 15.5%. Shares of the company have soared 81% in the past year.
The Zacks Consensus Estimate for ServiceNow’s second-quarter 2023 earnings has been revised northward by 6.2% to $2.05 per share over the past 60 days. For 2023, earnings estimates have moved up by 43 cents to $9.59 in the past 60 days.
NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 10.4%. Shares of the company have inched up 22.9% in the past year.
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Stratasys (SSYS) Provides Estimates for Desktop Metal Merger
Stratasys (SSYS - Free Report) recently filed a preliminary Form F-4 with the United States Securities and Exchange Commission and provided revenue and EBITDA estimates for its proposed combination with Desktop Metal, Inc. (DM - Free Report) .
The combination will have Desktop Metal’s advanced technology for metal mass production along with Stratasys’ robust polymer solutions and operational capabilities. Stratasys’ total addressable market for manufacturing is likely to double by 2027 with Desktop Metal’s high-growth metals portfolio. This combination will significantly improve SSYS offerings in the rapidly growing dental vertical, which comprises 35% of Desktop Metal’s business and has an expected market growth rate of 30% from 2022 to 2027.
Moreover, Desktop Metal’s strong intellectual property across applications will allow the combined company to have more than 3,400 active patents, pending patent applications and one of the largest research & development and engineering teams in the industry with over 800 scientists and engineers. The combined company will have more than 27,000 industrial clients across industries and applications.
Stratasys, Ltd. Price and Consensus
Stratasys, Ltd. price-consensus-chart | Stratasys, Ltd. Quote
The combined company is expected to generate revenues of more than $1.6 billion and EBITDA of over $300 million in 2026 at base case against a 20% pro forma EBITDA margin. This suggests a top-line compound annual growth rate (CAGR) of 19% from 2022 to 2026 compared with 14% CAGR for standalone Stratasys over the forecast period. The estimates consist of $50 million in run-rate cost synergies and $50 million in run-rate revenue synergies, which are expected to be completely realized by 2025. In case of a downside, the combined company is expected to generate revenues of more than $1.4 billion and EBITDA of over $200 million in 2026 against a 14% pro forma EBITDA margin.
Per the terms of the agreement, Desktop Metal shareholders will receive 0.123 ordinary shares of Stratasys for each share of Desktop Metal Class A common stock. The transaction is subject to customary closing conditions, including the approval of both Stratasys and Desktop Metal stockholders and the receipt of certain governmental and regulatory approvals. It is likely to close in fourth-quarter 2023.
Stratasys 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 and strategic partnership agreements or acquisitions.
In April, Stratasys signed a joint development and commercialization agreement with Israel-based regenerative medicine company, CollPlant Biotechnologies, to develop a solution that bio-fabricates human tissues and organs. In late March, SSYS announced that it received an order from its existing customer, Gotz Maschinenbau, for four of its high-speed H350 3D printers.
Last month, the company reported better-than-expected results for the first quarter of 2023. Its first-quarter revenues of $149.4 million surpassed the Zacks Consensus Estimate of $142.2 million. Moreover, Stratasys reported non-GAAP earnings of 2 cents per share, while the consensus mark was pegged at a loss of 8 cents per share.
Zacks Rank & Stocks to Consider
Stratasys carries a Zacks Rank #3 (Hold), while Desktop Metal has a Zacks Rank #2 (Buy) at present. Shares of SSYS and DM have lost 7.5% and 12.2%, respectively, in the past year.
Some better-ranked stocks from the broader Computer and Technology sector are Meta Platforms (META - Free Report) and ServiceNow (NOW - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Meta Platforms' second-quarter 2023 earnings has been revised downward by 5 cents to $2.82 per share over the past 30 days. For 2023, earnings estimates have moved north by a penny to $11.94 in the past seven days.
META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 15.5%. Shares of the company have soared 81% in the past year.
The Zacks Consensus Estimate for ServiceNow’s second-quarter 2023 earnings has been revised northward by 6.2% to $2.05 per share over the past 60 days. For 2023, earnings estimates have moved up by 43 cents to $9.59 in the past 60 days.
NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 10.4%. Shares of the company have inched up 22.9% in the past year.