We recently published a list of 10 Worst 3D Printing and Additive Manufacturing Stocks To Buy. In this article, we are going to take a look at where FARO Technologies (NASDAQ:FARO) stands against other worst 3D printing and additive manufacturing stocks.
The Global 3D Printing & Additive Manufacturing Market
3D printing and additive manufacturing (AM) is a technology that creates three-dimensional objects by layering materials. This technology offers a range of benefits, including the ability to use various materials such as plastics, metals, and biomaterials. It has diverse applications across engineering, healthcare, and entertainment industries and employs different processes like stereolithography and digital light processing. Notably, 3D printing enables the production of parts with high precision and reliability and allows for the creation of customized parts with intricate geometric structures.
According to a report by Precedence Research, the global 3D printing market was valued at $24.61 billion in 2024 and is expected to reach $117.78 billion by 2033, expanding at a CAGR of 19%. North America accounts for over 34% of revenue share, whereas the European market experienced the fastest growth in 2023. Europe is poised to emerge as a hub for additive manufacturing, driven by the presence of numerous industry players who possess in-depth technical expertise in additive manufacturing techniques. In terms of printer type, industrial printers led the way, generating more than 77% of total revenues. Stereolithography technology, which uses ultraviolet (UV) light to create objects from liquid resin, played a significant role, contributing over 11% of total revenues.
The 3D printing market revealed a strong presence of prototyping applications, which emerged as the largest segment, accounting for over 55% of total revenues. This indicates that the technology is being widely adopted to create prototypes, which is a critical stage in the product development process. The prototyping segment’s dominance can be attributed to the ability of 3D printing to rapidly produce complex designs, test, and iterate on them, and refine the final product. This has led to increased adoption in various industries, with the automotive sector being a prime example. The automotive vertical was the leading industry, capturing over 25% of revenue share, as 3D printing is being used to create complex car parts, tooling, and prototypes. Furthermore, the market also saw a significant contribution from metal materials, which dominated the market, accounting for over 53% of global revenue.
ARK Invest Forecasts 40% Annual Growth for 3D Printing Industry
According to Tasha Keen, Director of Investment Analysis and Institutional Strategies at ARK Invest, 3D printing will scale at a 40% annually to reach $180 billion by 2030. With its potential to disrupt industries worth over $4 trillion in revenue, Keen is confident that 3D printing will become a transformative technology that revolutionizes how industries manufacture and produce goods.
According to Keen, 3D printing is already being used extensively in prototyping, tooling, and production, with the latter being the largest addressable opportunity. The automotive industry, in particular, is embracing 3D printing, with companies such as Tesla experimenting with printing entire vehicle underbodies. The technology has the potential to simplify supply chains, reduce labour costs, and improve product strength by eliminating joints. Moreover, 3D printing can significantly reduce automotive development time and design validation costs.
Beyond automotive, 3D printing is also transforming the medical industry, enabling breakthroughs in surgeries and improving patient outcomes. Using patient-specific 3D printed tools and moulds has improved surgical accuracy and results by 40-50% and reduced operating time by 30%. While the 3D printing industry itself has grown slower than expected, Keen believes that software-enabled 3D printers will be a game-changer. These machines, equipped with sensors, can collect data on each print and send it back to manufacturers, enabling them to improve the print process over time. Keen forecasts that this could lead to higher margins for printer manufacturers and create a more sustainable business model.
The 3D printing market is poised for significant growth, driven by its diverse applications across various industries, including engineering, healthcare, and entertainment. The technology’s ability to produce parts with high precision and reliability, as well as its capacity to create customized parts with geometric structures, has made it an attractive solution for companies looking to innovate and improve their product development processes. With that in context, let’s take a look at the 10 worst 3d printing and additive manufacturing stocks to buy.
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FARO Technologies (NASDAQ:FARO)
Short % of Float: 8.80%
Number of Hedge Fund Investors in Q2 2024: 20
FARO Technologies (NASDAQ:FARO) is an information technology company specializing in software-driven 3D measurement, imaging, and realization solutions. The company has established itself as a strong competitor in 3D printing and expanded its reach through strategic acquisitions.
FARO Technologies’ (NASDAQ:FARO) cloud-based Sphere platform has the potential to drive growth and increase profitability. The company’s recent launch of Sphere XG, a unified cloud platform that enables users to view and analyze 3D data, is a significant step forward in this strategy. Sphere XG allows users to combine 360° photos, 3D point clouds, and building information models (BIM) in one platform to provide a comprehensive solution for customers. The potential for Sphere XG to drive growth is significant. The market for 3D capture and virtual management tools is growing rapidly, driven by the increasing adoption of digital technologies in industrial sectors.
The company’s cost-cutting efforts have been successful, with non-GAAP operating expenses down 10% year-over-year (YoY) in Q4. This reduction in costs has helped to offset the decline in revenue, resulting in an adjusted EBITDA margin of 13.3%, a 2% YoY increase. The company’s free cash flow margin was approximately 15% in Q4, significantly improving from previous quarters. This increase in free cash flow results from the company’s focus on working capital efficiency the company expects to be cash flow positive in 2024, which will provide it with the flexibility to invest in growth initiatives and pursue strategic opportunities.
FARO Technologies (NASDAQ:FARO) is well-positioned to capitalize on the growing demand for 3D capture and virtual management tools. While 8.8% of the company’s shares are shorted, 20 hedge funds have maintained a bullish sentiment on the stock, with stakes worth $10.346 million as of the second quarter. Divisar Capital is the largest shareholder in the company, holding $29.42 million worth of stock as of June 30.
Overall, FARO ranks 3rd on our list of 10 worst 3D printing and additive manufacturing stocks to buy. While we acknowledge the potential of FARO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FARO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.