In the past few years, 3-D printing technology has caught the attention of many interested in manufacturing, medicine, and other areas where the printers are expanding. But now an entirely new segment is entering the fray -- Wall Street banks. The companies behind the remarkable printers have been true growth success stories, but now that the analysts are paying attention, should investors start to worry that the party's over?
This past week, two new brokerage firms joined the ranks of analysts hot on the trail of 3-D printers Stratasys (NASDAQ: SSYS ) , 3-D Systems (NYSE: DDD ) , and ExOne (NASDAQ: XONE ) . A total of 12 firms or banks have new analyst coverage in 2013 for Stratasys alone, and 10 for 3-D Systems. Among the Wall Street barrons are JPMorgan Chase (NYSE: JPM ) , Citigroup (NYSE: C ) , Deutsche Bank, Jefferies Group, and Credit Suisse.
To be fair, the Wall Street big guys are a little late to the party for Fool.com members. Both Stratasys and 3-D Systems were recommendations as early as 2008 and 2011, respectively, from Foolish advisors. Since ExOne has only been public for a handful of months, Wall Street's a little closer, but still behind your friendly neighborhood Fool.
Along with the newest public member of the printer market, Germany's Voxeljet (NYSE: VJET ) , the tech firms have been enjoying some serious gains this year:
|Company||2013 Gains (as of 12/12/13)|
In fact, the large rallies and increasing trades volume is likely what drew the Wall Street elite toward the companies in the first place. It's the M.O. of most big banks and brokerage firms to track trends in the market, and subsequently position themselves so they can profit from the coverage in the future.
Method behind the madness
Though investors should expect to see a higher volume of trades for the 3-D printing firms once major hedge funds and other brokerages get a hold of big bundles of shares, the current trend of new analyst coverage shouldn't be a worrying factor when considering the tech companies for a long-term investment.
When considering various companies to cover, there is a degree of marketing on behalf of the Wall Street firms. Keep in mind that there are no guarantees of positive coverage once an analyst starts digging. Plus, research divisions work independently of the banking arms -- but a bank or brokerage firm's favorable coverage of any company may inadvertently influence the same company's decision to use one bank over another for an equity offering or other transaction at a later date.
JPMorgan Chase, which initiated coverage of Stratasys in January of this year was given the lead role in the company's sale of $481 million in stock in September. The offering was cited as the sector's largest equity offering, according to Dealogic records that date back to 1993. Likewise, Citigroup initiated coverage for several of the 3-D printing companies and was later chosen for the bookrunner of Voxeljet's IPO in October.
For long-term investors already holding shares in hand, the news that Wall Street has warmed to 3-D printing technology should be a happy confirmation that the growth you sought early on has come to fruition. The success of these growth stocks has gotten to the point that larger investors can no longer ignore them. If you haven't jumped on board with 3-D printing yet, don't let Wall Street's new-found enthusiasm discourage you. The known uses of 3-D technology are just the tip of the iceberg, with possibilities for the development of new tech still fathoms below the surface.
Enjoy the new coverage from a variety of analysts -- they're doing a lot of your homework for you. But be sure to match the information with what's really important for your investment thesis.
A recipe for growth
While it's true that some of the older 3-D printing firms have a ton of growth behind them, but that doesn't mean they're anywhere close to being done. And as some of the Fool's best recommendations, you can be sure that there's more where that came from. David Gardner has proved critics wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.