Needham called the first quarter report “a solid start” to the year, and underlined the 18% year-over-year growth in “consumables” sales — the plastic composite used by Stratasys, Ltd. (NASDAQ:SSYS)’s printers to build objects — as particularly encouraging. Canaccord sees the company’s forward guidance as “conservative,” and thinks gross margins could improve, dropping more and more net profit to the bottom line.
But here’s the thing: With Stratasys, Ltd. (NASDAQ:SSYS) already expected to grow earnings at 30% per year over the next five years, big expectations are already well and truly baked into the stock’s price — which is now well north of 200 times earnings. Meanwhile, cash flow turned negative in the first quarter, and when dinged for its capital expenditures, the stock is now pretty deeply unprofitable from a free cash flow perspective as well.
In short, much as investors seem to love this stock’s story, I’m afraid investors at today’s prices will not enjoy a happy ending.
The article Tuesday’s Top Upgrades (and Downgrades) originally appeared on Fool.com and is written by Rich Smith.
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