At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and “initiating coverage at neutral.” Today, we’ll show you whether those bigwigs actually know what they’re talking about. To help, we’ve enlisted Motley Fool CAPS to track the long-term performance of Wall Street’s best and worst.
Who’s hot and who’s not in 3-D printing stocks
It’s been a busy few days for investors in the nascent industry of three-dimensional “printing.”
Last week, one of the industry’s pioneers, 3D Systems Corporation (NYSE:DDD) reported record high revenues and earnings. But because the company missed analysts’ revenue estimates ever so slightly, and gave guidance that fell similarly short of expectations, the shares shed 10% of their value post earnings. Analysts, however, stuck fast by the firm, with no downgrades yet sighted.
A few days later, 3D Systems’ archrival Stratasys, Ltd. (NASDAQ:SSYS) reported its earnings “crushing” — in the words of one Fool analyst — expectations on both the top and bottom lines. In response to that news, Stratasys actually earned itself an upgrade, as Needham & Co. pronounced itself won over to the stock’s side: “Since the merger in early December with Objet,” noted Needham, Stratasys has grown revenues 23% pro forma, maintained “solid high-teens operating margins,” and promised to keep up the momentum with revenue growth of between 20% and 24%. Based on these numbers, Needham says it expects Stratasys to report as much as $1.95 per share in profit this year, then grow that number 29% to $2.52 in 2014.
Introducing some new names
Undisputed earnings success at Stratasys, Ltd. (NASDAQ:SSYS), and strong performance (even if investors aren’t recognizing it as such) at 3D Systems Corporation (NYSE:DDD) is starting to attract competition, though. This week, a little-known penny stock with big-league aspirations, going by the name Massive Dynamics (alluding to the tech conglomerate in Fox’s television show Fringe) announced it is entering the 3-D market with a purchase of Hong Kong producer PrintForge 3D Ltd. Profitless, revenue-less, and selling for only $0.64 a share, Massive Dynamics isn’t truly a threat to any of the incumbents yet — but its announcement is just further evidence that 3-D printing is starting to catch investors’ imaginations.
A more serious contender, perhaps, is recent IPO ExOne Co (NASDAQ:XONE), which scored a trio of new buy ratings when analysts began rating it on Monday. FBR Capital extolled ExOne’s “ability to print in sand and metal at relatively fast speeds and low costs,” and predicted the $26 stock could hit $32 within a year. (Stephens also initiated at $32.) BB&T Capital did both of these analysts one better, though, and initiated the stock with a $34 price target — a potential 28% gain from today’s prices.
Like its fellows, BB&T’s buy thesis hinges on the understanding that among incumbent players “plastic-based 3-D printing is more common than metal based printing,” giving ExOne Co (NASDAQ:XONE) a key differentiator in its business. According to BB&T, ExOne’s “metal-based printing business should drive accelerating adoption and growth.”
Personally, I’m more impressed by hard facts than pretty promises. For that reason, I’m not as enthusiastic as these analysts about “story stocks” like ExOne Co (NASDAQ:XONE) or Massive Dynamics (cool name notwithstanding). But if truth be told… I’m not all that hot on 3D Systems or Stratasys, either.