DDD Stock Forecast: 3D Systems Corp. Locks in Powerful Partnerships That Will Positively Shape Their Future
This article was written by Grant Goldstein, a Financial Analyst at I Know First
“3D printing is going to be way bigger than what the 3D printing companies are saying”
-Credit Suisse
Highlights:
- 2018 Q1 Earnings Show the Company’s Long Term Outlook
- 3D Systems Snatches Sought After Partnership With The US Navy’s Shipbuilders
- 3D Printing Dental Services Have The Potential to Change Everything
3D Systems Corporation provides three-dimensional (3D) products and services, such as 3D printers, printer material, manufacturing services, and digital design tools. Also, 3D Systems precision healthcare capabilities allow for virtual surgical planning, simulation, and the printing of various medical devices. Headquartered in Rock Hill, South Carolina, the corporation has been in business for over 30 years and is the creator and patent holder of stereo lithography, a form of 3D Printing.
2018 Analysis
3D Systems had a rocky 2018 Q1. Fortunately, revenue increased by 6% YoY to $165.89 million. Unfortunately, financials were mostly down from last year: there was a GAAP loss of $0.19 a share, expenses increased by 8%, and cash decreased by 24.78%. With all this being said, 3D Systems is still confident in the future of their company as shown by treasury stock increasing by 141.4% and capital expenditures increasing by 86.34%.
3D Systems had these unfortunate numbers due to their aspirations to expand. The company used more cash and increased their expenses in order to invest in IT, new products, manufacturing, and customer innovation centers. Although earnings now are poor, DDD is willing to invest into their future before recognizing satisfactory earnings. The company confirmed this by saying, “We continue to make significant investments we believe are critical to the company for long-term success.” and there are a lot of promising signs that confirm future expansion. For example, healthcare revenue increased by 21%, printer revenue increased by 24%, software revenue increased by 13%, and manufacturing revenue increased by 2%. Also, the increase in both capital expenditures and treasury stock prove that the company is looking forward and confident for whats to come.
Although stock price initially slumped after Q1 earnings, it has since recovered and grown by 42.37%.
Generally, DDD has followed the 3D printing market in stock price. As compared to PRNT, the 3D printer ETF, the price trends are very similar with DDD being a bit more volatile. This shows that the whole 3D printer industry will determine a lot of DDD’s success, which is beneficial to DDD as the 3D printing industry is expected to grow to $17.2 billion by 2020, according to Statista.
On May 9th, DDD price crossed over the 50 day short term (blue) and 200 day long term (purple) moving average (MA), indicating a bullish breakout for the stock. Following this price crossover, DDD stock has been increasingly gaining higher than both the short term and long term MA, making the stock progressively bullish. Also, the short term MA has exponentially become larger than the long term since the MA crossover on May 8th, resulting in the stock being a must buy as stock price will continue to grow.
On May 9th, there was a volume breakout as investors were anticipating the announcement of the partnership between DDD and Newport News Shipbuilding. Typically, the volume for DDD tends to follow the price of the stock, suggesting that investors have confidence in the stock and it is bullish.
Huge Partnership Wins For DDD
On May 10th, 3D Systems announced a collaboration with Huntington Ingalls Industries’ Newport News Shipbuilding division, the United States largest military shipbuilder. 3D Systems will provide metal additive manufacturing technology to help build naval warships for the U.S. Navy. This will allow NewPort News Shipbuilding to utilize the ProX DMP 320 to 3D Print alloy replacement parts, valves, brackets, and housings for nuclear powered ships.
Huntington Ingalls is the largest ship builder in America, so if this project is successful, it could result in huge opportunities for 3D Systems. The Vice President of Engineering and Design of Newport News Shipbuilding stated that, “With the inclusion of the ProX DMP 320 into our manufacturing workflow, this marks the first metal 3D printer installed at a major U.S. Navy shipyard. With this disruptive technology, Newport News has the potential to reinvent shipbuilding.” This remark shows that, if all goes well, there could be more revolutionary work between the two companies. The VP’s statement really demonstrates desire for 3D Systems products as NewPort News Shipbuilding sees high potential in utilizing their product for the U.S. military. Along with DDD’s recent partnership with the U.S. Airforce, having expanded partnerships with the U.S. military would bring in major revenue.
Stock price increased by 14.5% from May 9th to May 10th as this news was announced. Thus, investors are confident this will provide future value for the company.
On June 12th, 3D Systems announced a partnership with Aquant’s Artificial Intelligence. Aquant uses machine learning to maximize enterprises uptime. 3D Systems is incorporating this AI in hopes of getting customer equipment downtime down to zero. The partnership between these two company is fundamental for 3D Systems if they wish to grow their customer base. With minimization of downtime, 3D Systems will be able to find larger clients who will trust their product and be able to rely on it without a scare of downtime.
On May 21st, 3D Printing Industry announced that 3D Systems were awarded the 2018 Healthcare Application of the Year for their NextDent 5100. The NextDent 5100 provides dentists with the ability to 3D print dental appliances and sacrificial castings. The success of the NextDent projects the developing digital dentristry market and demand for 3D Systems’ healthcare products. In fact, GE stated that, “There is substantial potential for 3D printing to bring comprehensive change to the dentistry profession.” According to SmartTech Markets Publishing, digital dentistry revenue is forecasted to be $9.7 billion by 2027. Being that 3D Systems is the leader of this industry, a growing 3D printing dental market would be lucrative and bring various opportunities for success.
Following this news, DDD stock increased on May 21st as investors were hopeful for the future of the digital dentistry industry.
(NextDent 5100. Source: 3D Systems Corp.)
Current I Know First Bullish Forecast for DDD
I Know First Algorithm recognizes the long term potential for 3D Systems and, thus, gives the 1 year forecast a strong predictability of .58 and a signal of 79.63. Also, both the 1 month and 3 month forecast are bullish.
Conclusion
I believe that 3D Systems is a great long term buy. There are various variables in the works and if the company plays its cards right, it can see unbelievable development. DDD is clearly spending more money and investing into their future, as evident from their Q1 earnings. Once these investments come to fruition and expenses ease up, the company will recognize aggrandizement. Although upcoming earnings may experience loss, overtime the company will prosper. To build on that, their partnership with Huntington Ingalls Industries has the potential to bring in more advancements for the company. If all goes well, Huntington Ingalls could use 3D Systems across the board for all their projects, which would not only bring in revenue, but would be great PR for 3D Systems as building for both the U.S. Navy and the Airforce demonstrate confidence in the product. Also, with the continuous prosperity of the digital dentistry industry, more healthcare services will be unveiled from 3D Systems that will increase DDD’s hand over the industry. I Know First’s forecast for DDD coincides with my forecast for the company as the 1 year prediction is extremely strong and promising.
Past I Know First Algorithm Forecast Success with DDD
On February 23rd, 2018 I Know First Algorithm issued a bullish forecast for DDD, with 1-year signal of 398.93 and predictability of 0.67, DDD has gained 49.93% since this forecast.
This bullish prediction was sent to the current I Know First Subscribers on February 23rd 2018
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