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The 3D printing sector had an impressive week and almost all of the participants gained substantially -- 3D Systems (DDD) went up by more than 12% and Stratasys (SSYS) recorded gains of about 13%. The increase in stock price was mainly due to the buy ratings by some analysts about Stratasys and 3D Systems. On the other hand, ExOne (XONE), another player in the sector, rose mainly due to the news that the company is looking to maintain a gross margin of over 50%.

Although the past week was good for the whole sector, I will be focusing on 3D systems in this article. Specifically, I will try to explain how 3D systems can benefit from massive jewelry market, and how the jewelry industry is embracing 3D printing.

Traditional Ways of Manufacturing and Global Market

Traditional manufacturing of jewelry involves a number of steps: First of all, the design is created - after creating the design; the next step is to create a basic model of the design. Once the primary design is created, then it is evaluated and minor changes are made, if needed. Final two steps involve creating moulds for mass production and manufacturing and finishing of the final products. The traditional ways of manufacturing can take days from creating the design to producing the final product -- 3D printing, on the other hand, can do the job in hours. The technology has made life easier for a lot of jewelry manufacturers by allowing them to design and produce the prototypes in a lot less time than traditional methods.

The manufacturing process for jewelry involves a number of fine steps that need careful supervision. The use of 3D printing has allowed the manufacturers to bring down the costs and time needed for production. The technology has saved a substantial investment on die casting or investment casting, and it has also allowed the manufacturers to have more control over the manufacturing process and introduce customization. At the moment, the global jewelry market stands at about $150 billion, and the industry is rapidly adopting the technology. In fact, jewelry manufacturing is becoming one of the most important growth drivers for the 3D printing companies, after medical applications.

Materials Available and Mass Production

The number of materials available for 3D printing is increasing due to the increased focus on research and development to meet the demand. The technology is now allowing the manufacturers to produce final products, which has increased the need to add more materials to the list. In the past two years, the number of materials used for 3D printing has increased considerably; 3D printers can now use titanium, stainless steel, silver and gold.

Cookson Precious Metals is already manufacturing jewelry by using metal laser sintering in collaboration with EOS. In addition, BBC recently published an interesting article on how the technology is transforming the jewelry manufacturing industry. So, the materials are available and the manufacturers are adopting the technology - we have all the pieces in place to see a transformation in the jewelry manufacturing.

Where does 3D Systems Stand in All this?

3D Systems, unlike its peers, is focusing more on the consumer market. Most of its target markets are at the beginning of their growth phases. The company recently announced its collaboration with the Turkish jewelry manufacturer, Al-Mera. 3D Systems is one of the few manufacturers that offer solutions for the jewelry manufacturers. Its ProJet 3510 CPX and CPXPlus printers allow the manufacturers to save money on investment casting.

On the other hand, the company is also providing materials for volume jewelry production. Last year, it developed Visijet Jewel, which is used in the ProJet printers and allows the manufacturers to cut the costs substantially in the manufacturing process.

Conclusion

In my previous article, I developed a valuation model for the company and concluded that the stock will reach $47 per share. I have high hopes for the company because I see a lot of areas where 3D systems can grow in the future, and the jewelry manufacturing is one of these sectors. There is an incredible opportunity available in this sector, and 3D Systems is well positioned to benefit due to its early entry. I believe soon this segment will become one of the main revenue drivers for 3D printing companies. In addition, 3D systems has a large portfolio of materials - it should be remembered that the manufacturers will be needing a number of different materials for jewelry and other accessories, which the company possesses. As I have said in the past, 3D systems has a solid business model, which ensures that the company will be able to grow even if 3D printer sales come down in the future.

Source: 3D Systems And Jewelry Manufacturing: A Match Made In Heaven?