Shares of 3D-printer manufacturer 3D Systems (NYSE:DDD) plunged as much as 11% in response to an analyst downgrade on Thursday. As of 2:50 p.m. EDT, the stock has rebounded somewhat -- but is still down 5.1%.
Wall Street analyst Piper Jaffray cut its rating on 3D from "neutral" to "underweight" (analyst-speak for "sell"), and assigned the stock a $10 price target, implying an additional 25% downside from its already-lower price.
Citing findings from a survey it conducted, Piper says that demand for new 3D printers declined sequentially in the most recent quarter, since Q1 2018; more of 3D's customers said they expect to buy fewer printers than previously planned, than said they will be buying more.
In Piper's view, however, the primary cause for this isn't weak demand for printers -- it's increased competition from the likes of (among others): HP; General Electric; privately held Formlabs, Inc. of Somerville, Massachusetts; and Carbon, Inc. of Redwood City, California. (Perhaps importantly, Piper did not cite 3D's archrival Stratasys as one of the companies stealing away its business.)
In a note covered by StreetInsider.com, Piper further predicted that while 3D Systems may enjoy continued success in growing sales, it "will need to increase spending on direct sales, customer support and consulting" to do so, with the result that even growing sales will not result in "meaningful profitability ... throughout 2018."
Sad to say, that tallies pretty well with what other analysts are saying about 3D Systems. According to data from S&P Global Market Intelligence, few analysts see the company turning profitable before 2020, and sell ratings on 3D Systems stock now outnumber buys 5-to-1.