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Why Shapeways Stock Just Jumped 25%

By Rich Smith – Oct 26, 2021 at 11:00AM

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In two days, three analysts have jumped on the 3D printing company's bandwagon.

What happened

Wall Street analysts are lining up to recommend shares of 3D printing design library Shapeways (SHPW 0.92%), which recently went public via a special purpose acquisition company merger. And as Wall Street's enthusiasm grows, so has Shapeways' stock price.  

As of 10 a.m. EDT Tuesday, Shapeways stock had surged 24.6%.

Arrow angles up on a green stock chart.

Image source: Getty Images.

So what

The bandwagon-hopping began on Monday when analysts at Stifel initiated coverage of Shapeways with a buy rating, then accelerated this morning when Craig-Hallum and Needham did likewise.

"Shapeways is a leader in the large and fast-growing digital manufacturing industry," explained Stifel in a note covered on StreetInsider.com yesterday." The company provides "high-quality, flexible on-demand manufacturing that is powered by purpose-built proprietary software that enables customers to rapidly transform digital designs into physical products." And in contrast to other 3D printing plays, which focus on hardware, Shapeways is moving toward higher-margin "software as a service (SaaS) as manufacturers look to digitize operations."

Now what

Stifel predicts that this higher-margin focus will help to make Shapeways a $13 stock over the course of the coming year, and Craig-Hallum agrees. Initiating coverage (also with a $13 target), Craig-Hallum adds that "Shapeways' platform offers customers access to high quality manufacturing and helps automate the production process." The analyst believes this market is already worth tens of billions of dollars annually, and could "more than triple over the next ten years."  

With a price target of $12 (or about 40% more than Shapeways costs right now), this makes Needham & Co. actually the most conservative of the analysts who assigned buy ratings to Shapeways today -- but Needham is still pretty optimistic, too. Predicting "accelerating revenue growth and expanding margins in 2022 and beyond," Needham argues that Shapeways "has several levers to pull to drive accelerating growth ... including expanding sales with its top 250 accounts while adding new customers ... layering traditional manufacturing technologies into its established additive manufacturing platform through M&A, and monetizing its proprietary software by making its tools available to small- and mid-sized manufacturers" through SaaS.

With Shapeways having just turned in its first quarterly profit earlier this year, the good news may only have just begun.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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