3D Systems (DDD): Can The Stock Surprise In Q1 Earnings?
Zacks Investment Research | May 01, 2016 09:12PM ET
3D Systems Corporation (NYSE:DDD) is expected to report first-quarter 2016 results before the opening bell on May 5.
Last quarter, the company posted a staggering positive earnings surprise of 433.3%. However, 3D Systems has had a bumpy earnings history wherein it missed estimates two times in the last four quarters, leading to an average negative earnings surprise of 45.8%.
Let's see how things are shaping up for this announcement.
Factors to Consider
3D Systems’ strategic initiatives like expansion of quickparts services, acceleration of 3D printer penetration, bolstering healthcare solutions applications, developing affordable consumer printers and providing an integrated 3D authoring solutions platform are likely to boost its first-quarter 2016 results. In addition, operational restructuring like improving of the sales network to make it more productive and scalable as well as undertaking of lean manufacturing initiatives in supply-chain operations are expected to be conducive to the results.
In fourth-quarter 2015, 3D Systems entered into collaboration with two major healthcare companies to expand its Simbionix training product line for women and launched a new cardiovascular anatomical model product line for medical professionals. With such initiatives, we expect the company’s healthcare and related applications to act as a major growth driver for the first-quarter results.
This apart, 3D Systems’ continuous efforts to expand product lines are also expected to augment growth. During the first quarter of 2016, the company upgraded the MultiJet Printing (MJP) family of 3D printers with the launch of high-throughput ProJet MJP 3600 Series and introduced Geomagic Freeform 2016 software products. These new products are expected to drive the quarterly top-line performance.
We believe, surging popularity of 3D printing in almost every field ranging from automotive and consumer products to defense and industrial/business machines has provided the much-needed pick-up after a relatively gloomy 2015 which saw a deterioration in major 3D printing stocks. As a matter of fact, the stock gained 103.6% year-to-date, reflecting the renewed strength in this industry.
Despite these positives, dismal printer sales over the past few quarters on account of issues like printer mal-performance, which had particularly hurt the sales of professional 3D printers and damaged customer reputation, may continue to bother top-line performance during the quarter. Also, deteriorating macroeconomic conditions like economic slowdown, currency fluctuations and commodity prices volatility may also as significant headwinds.
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Of late, adverse currency translations have proved to be a major drag, as a significant part of the company’s revenues are generated from international markets. Also, cut-throat competition in the industry coupled with factors like escalating research & development and selling & administrative expenses are likely to mar the company’s financials.
Earnings Whispers
Our proven model does not conclusively show that 3D Systems will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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