Please ensure Javascript is enabled for purposes of website accessibility

Stratasys Stock Moves Higher on 3D Systems News

By Steve Heller - Apr 14, 2016 at 1:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A notable analyst endorsed 3D Systems' new CEO, who it expects will take the company in a new strategic direction, cut costs, and streamline the portfolio.

Image source: Stratasys. 

What: Shares of Stratasys (SSYS 3.68%) are following 3D Systems' (DDD 2.40%) lead after a Bank of America analyst upgraded 3D Systems on the belief that its recently appointed CEO Vyomesh Joshi -- VJ -- will improve the company's earnings prospects. At one point during the morning session, Stratasys' stock traded 9.9% higher, while 3D Systems traded 19.1% higher.

So what: BofA Merrill Lynch's Wamsi Mohan upgraded 3D Systems two notches, from underperform to buy, and raised his price target from $11 to $26 per share. Overall, Mohan thinks that VJ "has the experience to drive turnaround" at 3D Systems, and that he can take the company in a new strategic direction, cut costs, and streamline its portfolio.

Although today's development was directed toward 3D Systems' prospects improving under a new leader, Stratasys is also in the process of restructuring its business to improve its operating performance and financial flexibility. Investors may be growing more optimistic that Stratasys' restructuring efforts will also improve its long-term prospects.

Now what: Over the last three months, Stratasys' stock is up over 50%, even though the company reported that its fourth-quarter revenue fell 20.2% year over year to $173.4 million. This move suggests that investors are expecting better days ahead, which management reinforced when its 2016 full-year revenue guidance called for a 2.7% annual sales increase at the midpoint of the $700 million to $730 million revenue range.

Ultimately, Stratasys' move higher is based on the future being better than the past. Considering the industry has yet to show a meaningful improvement in demand, this may be a risk that's too great for more conservative investors to bet on.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

3D Systems Corporation Stock Quote
3D Systems Corporation
DDD
$10.23 (2.40%) $0.24
Stratasys Ltd. Stock Quote
Stratasys Ltd.
SSYS
$18.31 (3.68%) $0.65

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
322%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.