Why ExOne Co.'s "Transition Year" Is for the Best

ExOne's (NASDAQ: XONE  ) fourth-quarter earnings and 2014 sales guidance didn't meet analyst expectations, resulting in the stock selling off more than 8%. To make matters more troubling, management cited during the conference call that 2014 will be a "transition year," a cringe-worthy statement for investors to hear about an emerging growth company with bright prospects.

The reason for the harsh language doesn't necessarily have anything to do with the recent results of ExOne's business. The company came to realize that its products and services haven't been as well received in the metal casting industry as it had hoped. This key target market has proven to be more guarded and resistant to embracing ExOne's mold-making 3-D printing product, which require zero tooling, essentially devaluing industry trade secrets around tool making. In other words, the metal casting industry is scared that ExOne's technology is rendering the foundry business as we know it obsolete.

In the following video, 3-D printing analyst Steve Heller explains to investors that even though 2014 may be a transition year for ExOne on paper, it's in the best long-term interest of the company. By focusing directly on the end users that need its products and services instead of the foundries themselves, it has a chance to completely disrupt how the archaic casting business operates today. Ultimately, this could open up an even greater opportunity for the company down the road.

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