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Stratasys Signs 3D Printing Partnership with SIA Engineering

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Stratasys Ltd. (SSYS - Free Report) , a 3D printing company, recently entered into a strategic partnership with SIA Engineering Company Limited (SIAEC). The collaboration is aimed at accelerating adoption of additive manufacturing (AM) technologies for commercial aviation. Financial terms of the deal remain undisclosed.

The partnership will combine “Stratasys' deep know-how and expertise in additive manufacturing, including in the aerospace segment, with SIAEC's comprehensive maintenance, repair and overhaul ("MRO") service offerings to provide airline customers across the globe with scheduled maintenance and on-demand parts solutions.”

Per the agreement, the companies will form a joint venture, with the majority owned by SIAEC. Upon successful formation of this joint venture, the companies intend to establish Additive Manufacturing Service Centre in Singapore, through which they will offer design, engineering, certification support and part production services to SIAEC's well established network of partners and customers.

The recent partnership reflects the adoption of Stratasys’ 3D printing and additive manufacturing solutions in the aviation industry. It should be noted that over the past few months, the company inked strategic partnerships – with the likes of Airbus and The Boeing Co. (BA - Free Report) – in the aviation space.

We believe that this partnership will help Stratasys to gain competitive advantage over players like 3D Systems Corp. (DDD - Free Report) . Moreover, the collaboration will expand and enhance Stratasys’ AM or 3D Printing Platform. This association will also help the company to attract new clients and strengthen its overall market position.

Growth Prospects

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.

According to a recent survey by Lux Research, the 3D printed parts space will be an $8.4 billion global market by 2025, led by automotive, medical and aerospace applications. In addition, with lower costs of 3D printing as compared with traditional manufacturing, industries are increasingly adopting the technology in their manufacturing plants.

Data from the Wohlers Report 2014 revealed that the worldwide 3D printing industry is projected to grow from $3.07 billion in 2013 to $12.8 billion by 2018, and exceed $21 billion by 2020 at a CAGR of 34%.

As the industry leader in 3D printing, this is encouraging for Stratasys as it should take every opportunity to grab a large share of this market. Apart from the aviation industry, the company has entered into strategic partnerships in other spaces as well, including the auto industry with Ford Motor Co. (F - Free Report) and energy space with Schneider Electric, to tap the growing opportunity in the 3D Printing industry.

Notably, Stratasys outperformed the Zacks categorized Computer-Peripheral Equipment industry in the year-to-date (YTD) period. The stock returned approximately 20.4% YTD, outperforming the industry’s gain of 12.1%.

Bottom Line

We believe the recent deal with SIAEC is a strategic move by Stratasys to expand its geographic reach and drive market penetration.

The partnership spells opportunities for Stratasys’ 3D printing business and will strengthen its base. We believe that the company’s portfolio of new and innovative products will help it in the long run to generate incremental sales.

Stratasys has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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