Are There Promising Prospects Ahead For This Israeli-U.S. 3D Printer Company?

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Written By Dean McHugh

Stratasys (NASDAQ: SSYS), a prominent Israeli-US company, stands at the forefront of the global 3D printing industry, manufacturing cutting-edge 3D printers and consumables crucial for additive manufacturing. 

For potential investors interested in this dynamic sector, exploring SSYS alongside other industry players like Materialise NV (MTLS), 3D Systems Corporation (DDD), Proto Labs (PRLB), Xometry (XMTR), and The 3D Printing ETF (PRNT) could offer valuable insights.

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Navigating Challenging Economic Conditions 

Over the past three years, Stratasys has navigated challenging economic conditions, including a high-interest rate environment dampening demand for 3D printers and hindering new product development and manufacturing process experimentation. 


Additionally, geopolitical tensions in Israel pose a notable risk, considering the significant presence of SSYS in the region. Nevertheless, Stratasys maintains its leadership position in the industry, particularly excelling in polymer-based processes.

Stratasys Unveils F3300 3D Printer 

In a significant move, Stratasys unveiled the F3300 3D printer in 2024, boasting twice the speed of existing models. Notably, industry giants like Toyota have shown interest, with early adoption of this innovative product.

Moreover, the introduction of the GrabCAD Print Pro platform in 2023, a subscription-based service streamlining the printing process for FDM and SLA 3D printers, further enhances Stratasys’ competitive edge. 

These advancements, coupled with growth in the consumables business unit, signal a potential turning point for the company amidst challenging economic conditions.

Acquisition Suggests Stock Undervalued 

Recent merger and acquisition activities involving Stratasys suggest the stock may be undervalued. Analysis of multiples indicates a target price of $16.7, approximately 30% above the current valuation.

However, given the prevailing risks, including geopolitical uncertainties, a cautious “Hold” rating is warranted, though the potential return remains substantial.

Additional Insight Into Growth Prospects 

Examining Stratasys’ business units provides additional insight into its growth prospects. The Systems unit, focused on developing and selling a variety of 3D printers, rebounded from pandemic-related challenges but faced headwinds in FY23 due to high-interest rates. 

The launch of the F3300 is anticipated to drive sales growth in FY24 and beyond, particularly if interest rates decline.

The Consumables segment, responsible for selling materials used in 3D printing processes, has demonstrated consistent growth, reaching a CAGR of 8.1% between FY20 and FY23. 

With the introduction of faster printers, demand for consumables is expected to surge, bolstering revenue and economies of scale.

The Service unit, offering maintenance services and subscriptions, presents opportunities for recurring revenue but faces stiff competition. Nonetheless, it could play a pivotal role in margin improvement over the next few years.

Venture Into The Healthcare Sector 

Stratasys’ ventures into the healthcare sector, with initiatives like TrueDent and Go Orthotics, underscore its diversification strategy. 

TrueDent, an FDA-approved resin for 3D-printed dental applications, and Go Orthotics, focusing on custom orthopedic insoles, highlight SSYS’s commitment to high-margin healthcare markets.

Insights into Recent M&A Offers and Strategic Implications

In March 2023, Nano Dimension initiated a cash offer of $18 per share for Stratasys, which was consistently rebuffed by shareholders.

Subsequent offers from 3D Systems in July and September 2023, ranging from $7 to $23.6 per share, were also met with rejection due to perceived financial risks. 

Similarly, a proposed merger with Desktop Metal was welcomed by both CEOs but ultimately rejected by a majority of Stratasys shareholders. 

Despite these overtures, a preliminary offer of $16.5 per share from Nano Dimension in December 2023 remains unanswered by Stratasys. 

The persistent interest from potential acquirers reflects the inherent value of Stratasys, with cash offers signaling confidence in the company’s assets.

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Navigating Industry Challenges and Strategic Alliances

The flurry of M&A proposals underscores Stratasys’ strategic importance within the additive manufacturing industry. 

Cash offers, rather than stock exchanges, highlight the perceived quality of Stratasys’ assets and the financial risk associated with potential acquirers, many of which are comparable or smaller in size.

Moreover, these proposals involve companies well-versed in additive manufacturing, suggesting opportunities for synergies and economies of scale.

While an M&A deal holds potential for profitability, it also carries significant risks, including heightened solvency risks and the need for substantial capital infusion before cost synergies materialize.

Unraveling Challenges and Opportunities in the Additive Manufacturing Sector

The additive manufacturing industry faces intensifying competition, driven by increasing technology adoption. Despite widespread industry growth, negative operating performance persists for many companies, including Stratasys. 

Profitability hinges on sales growth and achieving economies of scale, with M&A deals offering one potential avenue but not necessarily a panacea.

Economic factors, particularly interest rates, also influence investment decisions, impacting Stratasys’ core industrial, automotive, aerospace, and healthcare clientele.

Insights into Financial Metrics and Future Trajectories

Stratasys’ financial data, sourced from Refinitiv Eikon, reflects the challenges within the additive manufacturing market, with forecasted revenue declines and contracting operating margins. 

The launch of new printer models and subscription platforms is anticipated to drive revenue growth and margin improvement in the coming years. 

Credits: DepositPhotos

However, the company’s current unprofitable state precludes traditional valuation methods, necessitating an EV/Sales analysis.

Despite liquidity control and a net cash position, Stratasys faces cash burn and potential debt accumulation, further exacerbated by ongoing economic uncertainties.

Balancing Opportunities with Risks in Stratasys’ Journey

Stratasys presents promising long-term prospects in the 3D printer OEMs market, particularly driven by its Consumables Business Unit and strategic initiatives like GrabCAD Print Pro software and healthcare ventures. 

While M&A proposals offer short-term profit potential, shareholders’ rejection of previous offers and industry challenges temper immediate optimism. 

Significant risks, including geopolitical tensions and high-interest rates, warrant caution, making Stratasys suitable primarily for long-term, industry-committed investors.

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