Shares of 3D-printer maker Stratasys (SSYS 4.59%) jumped in Tuesday trading, closing the day up 12.5%. You can thank Stifel Nicolaus for that.
Stifel initiated coverage of Stratasys stock with a buy rating this morning, assigning the stock a $40 price target. The analyst explained that, "[W]e like the company's simplified strategy, as it takes a step back to focus on maximizing its leading position in the polymers market" -- as opposed to newer 3D-printer makers such as Desktop Metals, which are focusing on the construction of hardier all-metal objects from additive manufacturing.
"While the growth outlook for the polymer industry may be lower than that of metals," noted Stifel in a note covered on StreetInsider.com, Stratasys's "mature" business "can leverage its existing infrastructure, including its best-in-class reseller network [to sell] refreshed and new technologies" to its existing customer base.
Stifel adds that it's optimistic about the company's new leadership team, headlined by new CEO Yoav Zeif, and likes the recent acquisition of start-up photopolymer printer Origin, as well. That being said, Stifel wants to see Stratasys not just bolt on additional businesses, but "return to organic growth" in its own right, in order to reverse a slide in revenues.
I think a lot of investors would agree with that assessment. Through the first three reported quarters of 2020, the company's sales declined 20%, and losses skyrocketed. Heading into the Q4 2020 report, which is due out next month, analysts are forecasting breakeven profits for Stratasys. That would be a nice change of pace, but the company has already racked up $455 million in net losses so far and is on track to report a big net loss for the year, no matter how good the final quarter ended up. Per-share losses are expected to be about $0.38.
2021 may be better for Stratasys, though. For what it's worth, most analysts are forecasting a return to modest sales growth (6%), and the company's first full-year profit since 2012 -- $0.07 per share. Fingers crossed.