3D Systems tumble on disappointing results
Anything and everything with exposure to the 3D printing space has caught a bid over the last few months. If you’re not familiar, 3D printing is the process of taking a digital model and creating a 3-dimensional solid object into virtually any shape. The process has revolutionized the way companies conduct research and development as the new process allows for faster designs and greater flexibility. The technology doesn’t come cheap, for an even basic at home model, you are looking at an investment of a few thousand dollars excluding materials. However, some on the street have speculated that 3D printing technology will soon be available to the masses. One company in particular with exposure to the 3D printing space, 3D Systems Corporation (NYSE:DDD) reported its second quarter earnings before the market opened on Tuesday mornings.
Early in the session shares of 3D Systems traded sharply lower off the news. Shares fell by more than 8.5% to $45.20 before pulling back slightly to $47.77 at the time of this release. The company reported adjusted diluted earnings per share of $0.20 and $120.8 million in revenues during the second quarter. During the second quarter of last year, 3D Systems reported adjusted diluted EPS of $0.18 on revenue of $83.6 million. Second quarter results fell short of analyst consensus estimates for EPS of $0.24 and $114.5 million in revenues.
While the company did beat analysts estimates on the top line by more than 5.5%, earnings per share was hurt by dilution caused by an additional 7.5 million shares entering the float. The company sold 7.5 million shares in a secondary offering earlier in the quarter to raise much needed capital. The offering priced at $40 per share generating $300 million in cash for the company. Absent those shares, EPS would have been at least $0.10 higher.
Going forward, it will be interesting to see if shares can find support around these levels. Considering shares have moved to the upside by over 40% this year alone, there is definite room to the downside. For the longer term investor who believes in the success of 3D printing, taking a long position at the secondary offering price point seems like a far better entry than where we are today. The street has taken an optimistic stance concerning the future of 3D Systems, of the ten analyst who follow the stock nine have a buy rating on the company with an average price target at $52.38.
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