William Blair's Jason Drab, bearish for a long time on 3D Systems (DDD +1.2%) and Stratasys (SSYS +2.9%), has upgraded the latter to Market Perform. The call is leading 3D printing names to trade higher out of the gate. XONE +2.1%. VJET +1.9%.
Drab cites Stratasys' core business strength, success at integrating Objet, new product launches and partnerships, and potential MakerBot revenue upside. He notes management's outlook implies MakerBot will have 2014 revenue of $120M, up from an estimated $80M in 2013, and that the business has recently struck a series of big reseller deals.
At the same time, Drab admits Stratasys' valuation (54x 2014E EPS) is well above that of tech companies he considers to have similar "growth, margin, and return profiles."
Today's gains come nine days after 3D printing stocks plunged in response to 3D Systems' warning.