3D Systems Is Back Where It Belongs

Feb.20.14 | About: 3D Systems (DDD)

3D systems (NYSE:DDD) experienced a decline of over 15% as the company came out with future outlook. I argued in my previous article that the market had overreacted and the fall in stock price in fact gives its long-term investors an opportunity to add to their positions. A week has gone by and the stock has gained more than it lost. However, these swings in stock price are certainly making a lot of short-term traders rich. The good thing about the 3D printing industry is that there is always some news, which causes the stock prices to record rapid changes.

As a result, the traders betting on volatility make handsome profits. As we all know, 3D Systems have been extremely aggressive when it comes to growth, both through acquisitions and new partnerships. These partnerships will go a long way in helping the company achieve a larger market share. Some of these partnerships are opening new markets for the company, which will not just result in short-term growth in revenues, but also provide an opportunity to further enhance the revenues.

Two New potential Markets

3D systems have recently announced partnership with Hasbro (NASDAQ:HAS), the manufacturer of some of the largest toy brands of the world. Hasbro is a huge player in the toy market with a strong retail market. The details of the partnership have not been revealed by the companies yet, but this opens another door for 3D Systems in a completely different market. This is the second major partnership for the company after it recently announced its partnership with Hershey's.

These two partnerships have opened two new markets for 3D Systems, which should support its future revenue growth. Hasbro has some of the biggest brands in the toys market such as the transformers, Star wars, Monopoly and Scrabble. Both of these companies are looking to launch play printers and platforms by the end of the year. I believe the importance of this partnership should be seen in the context of the acceptability of the 3D printing technology. As I have mentioned in my previous articles, the manufacturing companies are now increasingly trying 3D printing and Hasbro coming out with this partnership is another proof of that.

The reason I see so much potential in 3-D printing industry is that the possibilities are endless. On the one side, the company is printing chocolate with Hershey's while on the other hand, it is selling industrial printers to some of the biggest manufacturers. It is not just the growth these segments present, but also the diversity they offer.

Another act which may turn into a whole other industry is robotic suits for the disabled people. 3D Systems recently announced the printing of first ever hybrid robotic suit joining hands with EksoBionics. The suit would allow the disabled people to walk easily. This is a major step for the company as it strengthens its medical devices segment and it shows that 3D printing can move from just dental products to larger and bigger structures. Although this is just a prototype, the results are extremely encouraging and the companies can benefit substantially from this partnership in the future.

Growth prospects

We all know that the growth prospects of the 3D printing industry are bright and it is growing at an exceptional rate. I have shared industry researches in the past with my readers - recently, a new research report came out which also highlighted some growth areas. Let's look at some of the areas. According to the report, the industry is expected to grow at an annual rate of 20% over the next five years. The major opportunities will be in the industrial segment, where the demand for 3-D printers for manufacturing molds and prototyping purposes will remain high. Furthermore, the demand in the medical devices and dental segment will also remain high. As I mentioned above, the production of robotic suits will be a major step in the medical science and it will open a new opportunity for 3D Systems. At the moment, United States is the largest market for 3-D printing and it will remain the largest market for 3-D printing by 2017, with a total market share of 42%. The summary of the full research report can be read here.


I have maintained that 3-D printing will become a major player in the manufacturing and companies like 3D Systems and Stratasys (NASDAQ:SSYS) will continue to benefit. I will reiterate that the short-term swings in the stock price for 3D Systems should not spook investors as I believe the long-term prospects of the company are real, and it will be a good long-term investment. The company is growing its portfolio impressively with partnerships, which should enhance its future revenue growth.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. IAEResearch is not a registered investment advisor or broker/dealer. This article was written by an analyst at IAEResearch and represents his/her personal opinion about the companies mentioned in the article. The article is for informational purposes only and it should not be taken as an investment advice. Investors are encouraged to conduct their own due diligence before making an investment decision. I am not receiving any compensation (other than from Seeking Alpha) for this article, and have no relationship with the companies mentioned in the article.