Source: Stratasys.

What: Following a tumultuous start to the week that saw 3D printing company Stratasys (NASDAQ:SSYS) lose more than one-quarter of its value after reporting preliminary fourth-quarter results and providing 2015 guidance that fell short of the mark, research firm Gabelli & Co. upgraded the company on Wednesday. Additionally, Gabelli & Co. upgraded Stratasys' primary rival, 3D Systems (NYSE:DDD), as well.

So what: In a research note put out yesterday, Gabelli & Co. covering analyst Hendi Susanto raised his rating on Stratasys and 3D Systems to buy from hold.

For Stratasys, Susanto placed a $77 price target, which factors in an enterprise value-to-EBIDTA multiple of 20. Susanto notes that while Stratasys will likely produce negative free cash flow in 2015, and its margins are projected to expand at a slow rate into 2016, its core business remains "solid."

As a refresher, this note from Susanto comes after Stratasys offered up preliminary revenue guidance of $748 million-$750 million in Q4 with adjusted EPS of $1.97-$2.03, and offered 2015 guidance of $940 million-$960 million in revenue on $2.07-$2.24 in adjusted EPS. Comparably, both revenue figures are just slightly off the mark, but both EPS figures widely missed Wall Street's consensus.

For 3D Systems, whose stock also fell in sympathy with Stratasys', Susanto suggested a price target of $39 based on 20 times EV/EBITDA, the same ratio used above for Stratasys. Susanto believes that, like Stratasys, it's likely 3D Systems will also invest heavily in future growth opportunities, but that there's limited downside left in its share price at these levels.

Now what: The $64,000 question then becomes: Do these upgrades really make sense? My initial instinct is to say it might for Stratasys, despite its disappointing preliminary results and guidance, but I'm not sold on the 3D systems upgrade yet.

Source: 3D Systems.

Look at this from the perspective of business performance. By now, everyone on Wall Street has heard the story of how these companies are going to revolutionize the industrial sector, and how one day they could feed the world. But when push comes to shove, Stratasys grew its full-year revenue by 54%, of which 31% was organic growth. In contrast, 3D Systems has continued to struggle with rolling out new product and with manufacturing constraints for its direct-metal printers, resulting in an organic growth rate in the third quarter of just 12%. 3D Systems is scheduled to report its fourth-quarter results in three weeks.

Not only is Stratasys growing quicker on an apples-to-apples basis, but it's also about 10% less expensive on an EV/EBITDA basis than 3D Systems, it has slightly more net cash on hand, and its PEG ratio (a measure of price-to-earnings relative to future growth prospects) is more favorable than that of 3D Systems.

Don't get me wrong: I'd still approach the 3D printing industry as if you were walking on eggshells following Stratasys' warning, but I personally consider Stratasys worthy of the upgrade and the far better buy of the two.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.