DDD Stock Forecast: Why 3D Systems Deserves A Price Target of $35

motek 1The DDD Stock Forecast 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 of 3D Systems touts a YTD return of +166.13%. I’m still endorsing it as a buy.
  • DDD is still significantly lower than its 52-week high of $56.60. My one-year price target for it is $35. Go long on DDD while it still trades below $29.
  • The Q2 2021 numbers are excellent. Improving margins convinced me DDD could turn profitable by Q1 2022.
  • The $432.23 billion medical equipment industry is a long-term tailwind for 3D Systems.
  • 3D Systems is still the best bet on the fast-growing $12.6 billion additive manufacturing industry.

I am a graphic artist by training. I like 3D printing or additive manufacturing. I, therefore, endorse 3D Systems (DDD) as a buy. Yes, DDD is now expensive to own because of its +166.13% YTD gain. DDD’s forward P/E valuation ratio is now at 67.97.  Investors are still optimistic about 3D Systems. DDD is trading below $28. It is 50% discounted against its 52-week high of $56.50 (set last February).  I firmly believe 3D Systems is still the best bet on the fast-growing $12.6 billion 3D printing or additive manufacturing industry. Let us be bold and consider adding DDD in our long-term growth portfolio.

(Source: Seeking Alpha)

I like management’s decision to sell non-core assets to raise more cash. 3D Systems’ net loss in Q2 was only $9.6 million. This is way below its Q2 2020’s net loss of $38 million. This year’s Q2 revenue of $162.6 million which is more than a 44% Y/Y improvement.

The Hazard of Investing On 3D Systems

Seeking Alpha authors are generally bearish against DDD. However, they are probably with the short-sellers who bet $435 million that 3D Systems’ stock will dip farther. This is the hazard of investing on DDD. It is prone to short-sellers. On the other hand, I’m highly confident that DDD deserves a one-year price target of $35. This is higher than my September 2018’s PT of $30. I cannot give DDD a higher price target because of the chart below. Sad but true, DDD’s rebound trip to above $40 is hampered by its short interest of 12.98%.

(Source: MarketBeat)

Why There’s A Resilient Optimism For 3D Systems

Short-sellers aside, the management team is successfully guiding 3D Systems out of its net loss quagmire. 3D Systems is definitely suffering from this ongoing pandemic. The headwind from new (and coming soon) variants of COVID-19 does not dispel my bullish outlook for DDD. I like the upward trend of 3D Systems’ business margins. From -24.21%, the net income margin of 3D Systems is now only -9.25%.

(Source: MacroTrends)

Return to profitability is possible by end of 2021 or Q1 2022. The $12.6 billion 3D printing industry has a CAGR of 22.5%. The booster vaccine shots being implemented in the U.S. and other rich countries is very promising. The return to semi-normal business operations by next year is highly feasible. Yes, it is true that fully vaccinated people can still get infected by the highly-infectious variants. However, they only get mild symptoms and hospitalization/death is extremely rare. My fearless forecast is that this COVID-19 pandemic will likely become endemic like the common influenza virus. Private companies like 3D Systems should just allocate an annual anti-COVID 19 vaccination budget for their employees.

The revenue growth potential of DDD is decent. It posted a 7.30% revenue growth in 2021 despite the pandemic. This is notably above its 5-year revenue average CAGR of -3.60%. If management can attract more car manufacturers to use 3D printed metal parts for their new cars, I expect 3D Systems to wrap finish 2021 with total revenue of $630 million. This is highly feasible. The TTM revenue of 3D Systems is already $617.5 million.

Increasing revenue growth rate eventually leads to better profitability. I expect 3D Systems to finish 2021 with a positive annual EPS. The earnings whispers say DDD has an estimated Q3 EPS of $0.03. My Q4 earnings estimate is $0.10.

3D Systems’ Financial Health Is Acceptable

The total current assets of DDD is valued at $370.9 million. This is greater than its current liabilities of $158.9 million. The $370.91 million current assets value is also much higher than 3D Systems’ long-term debt of $19.2 million. As of June 2021, DDD touts a cash & equivalents reserve of $131.8 million. Based on the chart below, 3D Systems is strong financially.

The net operating cash flow of 3D Systems is $42.87 million which is sufficient to cover the company’s total debt of $56 million. There’s also enough left for more aggressive marketing. 3D Systems should hire a hard-up Hollywood actor/actress to sell more of its commercial 3D printers to factories and replacement parts shop owners. The base price of Figure 4 3D printer is only $21,900. There are millions of people around the world that can use their own high-volume home 3D printers. 3D Systems can produce a $5 million Hollywood movie that will promote the mainstream adoption of 3D printing.

DDD Stock Forecast: Conclusion

DDD is under heavy short-selling risk. Invest in this 3D printing leader at your own risk. If you are fearless like I am, then DDD is a buy according to the I Know First AI Algorithm (see below). The monthly technical indicators and moving averages of 3D Systems are clearly saying it is a buy.

(Source: investing.com)

My courageous buy rating for 3D Systems is also largely thanks to DDD’s very bullish one-year forecast from I Know First. The stock prediction AI of I Know First gave 3D System’s stock an algorithmic 1-year trend score of 279.49. It is therefore highly confident that DDD has strong upside potential within the next 12 months.

Past Success With DDD Stock Forecast

I Know First has been bullish on DDD’s shares in past forecasts. On our May 14, 2020 premium article, the I Know First algorithm issued a bullish DDD stock forecast. The algorithm successfully forecasted the movement of DDD’s shares on the 1 year time horizons. DDD’s shares rose by 126.37% in line with the I Know First algorithm’s forecast.

DDD stock forcast

Here at I Know First, our AI-based stock forecast algorithm has modeled and predicted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. The database used is 100% historical data free from human-derived assumptions and is constantly evolving with newly added data and adapting to changing market situations. Today, we are producing daily forecasts for over 10,500 assets such as forex forecasts, as well as gold predictions, while also providing the latest Apple stock news. These forecasts generated by our quant trading tool are used by institutional clients, as well as private investors and traders to identify the best investment opportunities in the market.

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