3D Stock Forecast (NASDAQ: DDD): 3D Systems Can Breach $30

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Summary:

  • The stock price of 3D Systems has more than doubled since my last buy rating for it last February 23. I still endorse this stock as a buy.
  • My fearless forecast is that DDD can hit $30 within the next 12 months. Additive manufacturing’s gradual shift from prototyping to production applications is a long-term tailwind for 3D Systems.
  • The 2018 Wohlers Report revealed that the 3D printing industry grew 21% to $7.3 billion in 2017. Sales of 3D-printed parts from independent service bureaus contributed $2.995 billion.
  • I Know First’s AI still gives DDD a bullish one-year algorithmic market trend forecast.

In spite of HP Inc’s (HPQ) launch of its supposedly superior multi-jet 3D printers in February, 3D Systems (DDD) still reported a 41% year-over-year growth in printers’ revenue during the Q2 2018 period. It goes to show that 3D Systems can prosper against HP Inc’s expansion into additive manufacturing printers. HP’s struggle is likely why it is getting a new division chief for its 3D printing business segment.

Consistent growth in printer sales can help 3D Systems return to profitability. On a GAAP basis, 3D Systems is still operating at a net loss. More investors will rally in boosting DDD higher if management delivers positive GAAP EPS for the next quarters.

(Source: Barchart)

The stock price of 3D Systems has more than doubled since my last buy rating for it last February 23. From less than $10.3, DDD now trades above $21. I reiterate a buy for DDD. Barring any concentrated massive short-selling from large market speculators, DDD can hit $30 within the next 12 months.

(Source: Macrotrends.net)

3D Systems Remains The Leader In A Growing Industry

The main reason for my optimism over 3D Systems is that it remains a leader in the growing $7.3 billion/year additive manufacturing industry. The $7.3 billion global revenue from additive manufacturing in 2017 was 21% higher than 2016’s $6.06 billion. The more customers who buy additive manufacturing printers, the stronger 3D Systems gets. Increasing printer hardware sales also improves the future revenue from the other services of 3D Systems.

(Source: 3D Systems)

Going forward, the fast-growing independent service provider industry for additive manufacturing is also another tailwind for 3D Systems. Out of the $7.3 billion 2017 revenue, $2.995 billion came from parts made/sold by independent service bureaus. These small or medium enterprises buy desktop/industrial 3D printers so they can serve the small-scale design/prototyping/manufacturing requirements of other companies.

3D Systems can sell its printers at lower margin to retain customers and recruit new buyers. It can then make up for it from selling plastic, metal, and other materials to users of its 3D printers. The important thing is for 3D Systems to keep selling more printers to enlarge its pool of repeat-purchase customers.

Just like it is in the inkjet/LaserJet printing business, the big money does not come from printer hardware sales. It is found in supplying the original ink or additive manufacturing materials.

Manufacturing Application Is Fast-Rising

The long-term prosperity of 3D Systems is getting better now that more companies are using 3D printing for production or manufacturing. As per the chart below, Statista estimates that production will account for 43% of global 3D printing applications this year. This is almost double than production’s 22% share last year.

(Source: Statista)

Going forward, greater adoption of additive manufacturing will happen when majority of small-run production of commercial products and parts/components is done through 3D printers. The emerging declining price tags of printers and materials should inspire more people/companies to adopt additive manufacturing for commercial production.

Factory-worthy products like the 3D Systems Figure 4 is perfect for cost-efficient low-volume production of small parts or commercial products. The Figure 4 can produce products with sizes up to 124.8 x 70.2 x 346 mm (4.9 x 2.8 x 13.6 inches). Its production rate can up be up to 1 per minute. In-demand items like plane/car parts are ideal for production using Figure 4.

Final Thoughts

I am already very impressed with the 143% YTD performance of DDD. I still think it has more upside potential. My $30 price target for DDD is reasonable.  3D Systems only needs to return to profitability to attract more institutional investors to rally behind it. I like it that institutional investors like BlackRock and Vanguard Group recently increased their position in 3D Systems. They apparently share my optimism for DDD.

As of June 30, BlackRock increased its exposure to 3D Systems by 29.38%. It now owns 16,413,577 DDD shares Vanguard increased it by 13.42% to 10,813,917 shares. Heeding these big boys’ investment choices could prove very rewarding for small retail investors.

(Source: Nasdaq)

I Know First also rates DDD as a strong buy. This is based on the stock’s positive near and long-term market trend forecast scores. DDD’s one-year trend score is very high, 315.53.

Past I Know First Forecast Success with DDD

I Know First has been bullish on 3D Systems shares in past forecasts. On February 23, 2018, I wrote about DDD another article where I stated that mainstream adoption of home/office 3D printers hadn’t happened yet. At that same time, I analyzed 3D Systems’ brightest hope for reinvigorating its fortune – medical-related applications for restorative and cosmetic dentistry. My guesstimate was that restorative/cosmetic dentistry could contribute as much as $300 million to 3D Systems’ topline starting 2019. Since then, DDD shares have risen 23.82% in line with the I Know First algorithm’s 3 months forecast. See chart below.

This bullish DDD Stock Forecast was sent to I Know First subscribers on February 23, 2018,.

Please note-for trading decisions use the most recent forecast.

To subscribe today click here.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplification explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

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