Stone Fox Capital • Today, 7:40 AM
- ExOne is setting up for another quarterly warning.
- Stock recently hit an all-time low below $14 based on those weak expectations and a sector under pressure.
- ExOne remains intriguing for a turnaround in 2015 now that investors have more reasonable expectations in the sector.
- ExOne has reported Q3'14 earnings, which missed big.
- Despite that, my share dynamics-based predictions about market reaction to the report are proving correct.
- Investors should focus on the long term, and the conference call contained several salient points about the company's progress.
Update: ExOne Q3 '14 Earnings Produce Another Warning
- ExOne reported Q3 '14 earnings.
- Investors should sell the stock.
- The investment thesis is altered by yet another large scale warning by ExOne that was anticipated as a major risk when buying the stock on an oversold bounce.
- Serial disappointer ExOne is now attractive at current valuations.
- The stock approaches previous buy target around $14.
- The stock remains highly risky until the company can deliver earnings that beat analyst estimates and company forecasts.
- ExOne’s share price has suffered as the company’s execution fails to inspire confidence.
- Valuation seems attractive and a real turnaround in execution might lead to substantial upside.
- Facility expansion and geographic expansion remain on track.
- High short interest should help establish a sustainable bottom in the following weeks, depending on the Q3 report.
- ExOne endured a massive drop in the gross margin last quarter, but the company is positioning itself well to benefit from the industrial 3D printing market.
- To meet the accelerating demand for industrial 3D printing, ExOne is increasing its sales force and production capabilities.
- ExOne is also investing in new technologies to tap the industrial 3D printing market.
- ExOne is expected to outperform the overall 3D printing market.
- The stock price has lagged the other two giants since the start of the year and ExOne has been the biggest loser.
- Revenue growth for ExOne has also fallen behind the bigger two peers and it has to go a long way to catch its peers.
- ExOne's advantage is that it is operating in a rapidly growing segment which should result in increased revenue growth for the company.
- Recent partnership with METOS should allow the company to enhance its sales through wider reach.
Why A Beaten Down ExOne Looks Like A Good Long-Term Opportunity
- ExOne's recent results were bad as the company's gross margin dropped drastically and its losses widened year over year.
- Investors, however, should consider capitalizing on ExOne's weakness as it is adopting smart strategies to profit from industrial 3D printing growth by investing in new materials technology.
- ExOne also faces some risks, such as potential competition from Hewlett-Packard and weak profit margins,. but it is slated to improve in the future.
- ExOne has announced 2Q14 earnings.
- The conference call shows both opportunity and missteps in the company's recent development.
- The timing of opportunity from my initial coverage was wrong, as I warned before most damage was done, but the long-term bull case has not been skewered yet.
- Down 50% this year, ExOne looks like an enticing investment considering the expected growth in industrial 3D printing.
- Although ExOne's bottom line will be constrained in the short run, the long-term prospects look intact due to its expertise in aerospace applications.
- ExOne already has well-known customers such as BMW and Sikorsky, and due to its investments in cutting-edge technologies, it can get better.
ExOne: Execution Turnaround Or Continued Disappointment?
- Q1 results could mark a turnaround in ExOne’s execution expectations, after four quarters of disappointing results.
- Previous downside target of $25 proved as correct, but the company really needs to live up to what it promised this year.
- Although the growth prospects seem compelling, if the company fails deliver above estimates in Q1, its share price will be punished.
- ExOne delivered another disappointing quarterly report, missing on both earnings and revenue.
- The company also guided 2014 revenue below consensus, which is more disappointing than the Q4 report.
- With shares down more than 50% from all-time highs and as the negative momentum accelerates, ExOne could continue to go down.
- ExOne’s growth prospects are still compelling, and the company should benefit from its recent investments and efforts but the valuation may still be an issue.
This Is What Happens To High Price/Sales Stocks That Don't Deliver
- After a string of misses recently, the 3D space is deflating.
- ExOne is the most recent company to miss and so far has corrected about 50% from its highs.
- Even with management forecasting 40%-50% revenue growth, and even after a 50% correction, ExOne is still rich.
- MWT and Machin-A-Motion acquisitions have enhanced the portfolio of the company.
- The recent sell-off has brought the stock close to its fair value.
- Sales pushed into the next fiscal year will allow the company to report better than expected results in the first quarter of fiscal 2014.
Wed, Jan. 14, 11:49 AM
- William Blair argues competition in the professional 3D printer market is intensifying, and that the consumables revenue of incumbents (20%-30% of total revenue, but 70%-80% of gross profit) is at risk. (source: Notable Calls)
- As evidence, Blair notes a new 3D printer from German injection molding system maker Arburg relies on thermoplastic pellets that cost ~1/100th as much as Stratasys' (SSYS -2.7%) thermoplastics. "Arburg is precisely the type of machine that we believe could significantly alter the competitive landscape."
- In addition to Stratasys, 3D Systems (DDD -4.5%) and industrial-focused ExOne (XONE -1.9%) are underperforming. The Nasdaq is down 0.6%.
- The group also sold off on Monday.
Mon, Jan. 12, 4:13 PM
- 3D Systems (DDD -3.8%), Voxeljet (VJET -3.9%), ExOne (XONE -5.6%), Organovo (ONVO -4.4%), Arc Worldwide (ARCW -7.3%), and to a lesser extent Stratasys (SSYS -2.8%) sold off today, generally on below-average volume. The Nasdaq closed down 0.8%.
- 3D Systems has received some favorable CES coverage over the last week. During a CES talk with management, Brean reported hearing of a "meaningful increase in partner interest," and that 3D thinks it offers an unmatched consumer experience in terms of ease-of-use. "DDD believes they are the only folks offering plug and play in just 10 minutes ... now it is not about making the printer work, but what can I get out. DDD has also cracked the code on content generation and getting content off of Cubify."
- Oppenheimer, which calls 3D its favorite name in the space, noted there weren't many new product launches from big OEMs, something it considers a positive. "We believe 2013 and 2014 were aberrant years and 2015 could return to more normal [investment] patterns."
- Dutch startup Ultimaker's desktop 3D printer line (competes against 3D's Cube line and Stratasys' MakerBot unit) received good reviews at CES. Ultimaker's systems, which are based on open-source hardware designs, are priced from $1,450-$3,030; two new models become available for pre-order in March.
- Last week: 3D Systems goes after MakerBot by acquiring botObjects
Sun, Jan. 4, 3:49 PM
- The following stocks were the Russell 2000's worst performers in 2014:
- KWK -93.5%. WLT -91.7%. AMZG -89.5%. PHMD -88.2%. EXXI -88%. RGDO -86.8%. REN -85.4%. HERO -84.7%. EOX -84.3%. MCP -94.3%. CVEO -84.2%. BPZ -84.1%. FWM -82.6%. MILL -82.2%. NADL -81.6%. VRNG -81.4%. CYTX -81%. SALT -80.5%. PRKR -80%. MBII -79.7%. NTLS -79.2%. COVS -78.9%. KEG -78.9%. MM 78 MPO -77%. ANR -76.6%. EXEL -76.5%. SZYM -76.3%. CONN -76.2%. ANV -75.5%. GALT -75.5%. ZQK -74.8%. ARO -74.5%. REXX -74.1%. GDP -74%. FUEL -73.8%. QRHC -73.7%. VTG -73.4%. RLOC -73%. XONE -72.2%.
Dec. 26, 2014, 1:03 PM
Dec. 26, 2014, 11:51 AM
- 3D Systems (DDD +5.8%), Voxeljet (VJET +9.2%), and ExOne (XONE +12.2%) are posting big gains on a day the Nasdaq is up 0.6%. Stratasys (SSYS +2.9%) is up more moderately, but also outperforming.
- Short interests for the group remain very high: As of Dec. 15, 3D Systems had 35.5% of its float shorted (a 52-week high); Stratasys had 21.7% (ditto); Voxeljet had 17.8%; and ExOne had 44.2%.
- Previous: Canaccord expects a 2015 rebound for 3D printing stocks.
Dec. 18, 2014, 7:38 AM
Dec. 15, 2014, 1:02 PM
- ExOne (XONE -8.7%) and Voxeljet (VJET -9.8%) are among the biggest tech decliners on a day the Nasdaq is down 0.4%. 3D Systems (DDD -3.4%) and Stratasys (SSYS -1.4%) are also underperforming.
- 3D Systems, Stratasys, and Voxeljet have made new 52-week lows, and ExOne is very close to doing the same. 3D Systems now goes for 3.3x 2015E sales exc. net cash, and Stratasys 3.9x 2015E sales exc. net cash.
- Last Friday: Canaccord expects a 2015 rebound for 3D printing stocks
Nov. 23, 2014, 10:25 AM
- Regulatory concerns are holding back the widespread adoption of 3D printing, a market that is predicted to reach $21B worldwide by 2020, compared with just $3.1B last year.
- The need to satisfy regulators about safety is an "obstacle" to the technology’s advance in certain sectors, says Stratasys (NASDAQ:SSYS) CEO David Reis. "Every part has to go through testing...every technology, every material has to go through certification."
- Manufacturers are facing many hard to win approvals, ranging from the FAA for the production of aerospace parts to the FDA for healthcare devices.
- Related tickers: DDD, VJET, XONE, ONVO, CAMT, OTCPK:AMAVF
Nov. 14, 2014, 4:44 PM
- Though it posted a Q3 miss and slashed its 2014 guidance on Wednesday, Oppenheimer thinks ExOne (XONE) will perform better in 2015.
- Oppenheimer notes the 3D printer maker is guiding for 25%-35% 2015 organic growth, and thinks the forecast could end up being conservative. Consensus is currently for 35.9% growth.
- Shares rose 7% in regular trading. They fell only 1.1% on Thursday, after initially selling off hard in response to ExOne's results/guidance.
Nov. 12, 2014, 5:36 PM
Nov. 12, 2014, 4:30 PM
- ExOne (NASDAQ:XONE) now expects 2014 revenue of $45M-$50M, below prior guidance of $55M-$60M and a $54.2M consensus.
- CEO Kent Rockwell: "We continue to struggle with predicting timing of our machine sales and therefore we are lowering our expectations for 2014 revenue based on clearer visibility for the remainder of the year."
- 8 printers were sold in Q3, up from 6 in Q2 but flat Y/Y. Only one high-end S-Max printer was sold, down from 3 in Q2 and 4 a year ago.
- Gross margin was 25.8% vs. 22.3% in Q2 and 45.2% a year ago. GAAP R&D spend rose 76% Y/Y to $2.3M, and SG&A spend 24% to $4.6M.
- Bigger rival 3D Systems (NYSE:DDD) has slipped in response to ExOne's numbers.
- Q3 results, PR
Nov. 12, 2014, 4:08 PM
Nov. 11, 2014, 5:35 PM
Nov. 5, 2014, 10:17 AM
- Stratasys beat Q3 estimates and reiterated its full-year revenue guidance, but also cut its full-year EPS forecast - the acquisition of cloud software vendor GrabCAD was blamed - and forecast its capex would soar in 2015. Its shares are currently down 13.6%.
- 3D Systems (DDD -3.8%), Voxeljet (VJET -5.3%), ExOne (XONE -4.9%), and Organovo (ONVO -1.4%) are following Stratasys lower. 3D Systems, which issued a big Q3/full-year warning on Oct. 22, is making fresh 52-week lows.
Oct. 30, 2014, 7:09 AM
Oct. 29, 2014, 10:39 AM
- After promising a 3D printing tech breakthrough for months, H-P (HPQ -0.2%) is finally sharing some details. The company plans to leverage a proprietary 4-step inkjet process known as Multi Jet Fusion. H-P claims the process can operate 10K nozzles at once, and allow objects to be printed more than 10x faster than conventional approaches.
- "That means a fundamentally lower cost," says H-P SVP Stephen Nigro. He adds H-P is focusing on the high-end/industrial segment, and suggests its printers will be priced towards the low end of the segment's traditional $150K-$500K price range.
- 3D printer makers aren't taking the news well: DDD -6.2%. SSYS -6.1%. XONE -8.1%. VJET -3.6%.
- H-P's printers won't be widely available until 2016; some customers will get to test them next year. Industry analyst Terry Wohlers thinks H-P's offerings could potentially "put some other companies out of business," and also expand the addressable market for printing sophisticated products.
- Forrester's Sophia Vargas is more cautious: Though calling H-P's solution well-suited for plastic printing, she notes the company hasn't yet proven it can work with metals and other materials.
- Also unveiled by H-P: Sprout, an $1,899 desktop featuring an overhead 3D scanning camera. The camera can turn anything placed on a mat in front of the PC's monitor (objects, sketches, written material) into digital content. It ships next month.
- Gartner recently forecast 3D printer shipments "will more than double every year between 2015 and 2018," reaching 2.3M units in 2018. Total end-user spending is expected to grow to $13.4B in 2018 from $1.6B in 2015.
XONE vs. ETF Alternatives
ExOne Co is a global provider of 3D printing machines & printed products to industrial customers. The Company's business consists of manufacturing & selling 3D printing machines & printing products to customers using its in-house 3D printing machines.
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