English: Miniature turbine 3D print from Rapid 2006 in Chicago, Illinois. (Photo credit: Wikipedia)
( please also review our article on 3D Printing in yesterday’s blog)
SSYS : NASDAQ : US$83.39
BUY
Target: US$95.00
COMPANY DESCRIPTION:
Stratasys Ltd. is a global provider of 3D printing solutions,including a wide range of 3D printers, consumable print materials and services. Stratsys Ltd. was formed with the merger of Stratsys and Objet in a stock-for-stock merger completed in December 2012. The combined company has an impressive portfolio of 3D printing and direct digital manufacturing solutions.
All amounts in US$ unless otherwise noted.
Investment recommendation
We reiterate a BUY rating and increase our price target to $95 driven by gross margin upside and solid execution of cross selling implementation.
With services gross margins poised to rebound and management’s expectation to sustain a high corporate gross margin level, we believe 2013 EPS guidance is conservative when applying the midpoint of guidance for revenue. We therefore raise our EPS for 2013E to the high end of the range at $1.95, increase 2014E EPS to $2.63 off of the higher base, maintaining that EPS upside potential remains versus our revised numbers given management is executing on its cross-selling effort ahead of plan.
Investment highlights
SSYS reported Q1/13A (Mar) earnings this morning. Revenues and EPS were $98.2 million and $0.43, compared to consensus estimates of $98.3 million and $0.38 and our estimate of $98 million and $0.37. Revenue increased 18% Y/Y (2% Q/Q) driven by 31% Y/Y growth in services (RedEye +42% Y/Y, Customer Services 25% Y/Y) and 16% Y/Y growth in products (Consumables +18% Y/Y, Printers +15% Y/Y)
Management reiterated their F2013 targets, with revenue expectation of $430 million to $445 million (20% to 24 % Y/Y growth) and non-GAAP EPS expectation of $1.80 to $1.95.
