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Stratasys Bounces Back; Needham Cautious on Earnings
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Stratasys Bounces Back; Needham Cautious on Earnings

Stratasys (SSYS) produces in-office rapid prototyping systems, and 3D printers for automotive, aerospace, defense, electronic, medical, education and consumer product manufacturers. The company has launched several innovative products that have strengthened its competitive position well over the long-term.

The company revealed in its second-quarter 2021 earnings release — announced on August 5 — that revenues had come in at $147 million, a 25% increase year-over-year.

Moreover, net loss per share narrowed 85% year-over-year to $0.02, on an adjusted basis. Management projected a 17-18% year-over-year revenue growth in the third quarter, which is comfortably above the 10% growth expected by analysts. (See Stratasys stock chart on TipRanks)

These strong results led to an 11.1% jump in the Stratasys share price, which closed at $21.89 at the end of Thursday’s trading session. The share price further increased 3.2% after hours.

Needham analyst James Ricchiuti said, “After six years of declining revenues, Stratasys now appears firmly on track to show a stronger-than-expected recovery in 2021, with full-year growth now expected to be in the low double-digits. We were impressed by the upside surprise in Q2 product sales.”

The company hasn’t, however, returned to the revenue-run-rate levels of early 2020. However, Stratasys has a solid product lineup for 2022 and Ricchiuti feels that the company might break the chain of low profitability soon.

“With major new products expected to ramp in 2022, Stratasys’ long trip back to meaningful levels of profitability may be in sight, though we continue to have questions about earnings leverage in 2022,” said Ricchiuti.

The analyst is quite confident that the two small acquisitions Stratasys had completed in the first quarter have the possibility to become key growth drivers in 2022, and beyond. Moreover, a debt-free balance sheet is a major positive for the company.

With these observations, Ricchiuti maintained a Hold rating on the stock without setting a price target, as he awaits more insights into the company’s earnings recovery.

Consensus among analysts for Stratasys is a Moderate Sell based on two Holds and one Sell. The average Stratasys price target of $19.50 implies a 8.7% downside potential from current levels over the next 12 months.

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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