Piper's Troy Jensen, a long-time 3D Systems bull, thinks the company's back-end loaded 2H14 guidance "presents a fair amount of risk." While still believing the 3D printing industry can see 25%+ organic growth long-term, he's now "more cautious on DDD shares given the slowdown in system and material sales coupled with increasing channel inventories."
FBR's Ajay Kejriwal, who launched coverage at Outperform only in December (3D was at $77 at the time), is now worried about slowing demand from polymer and prototyping clients, which he thinks more than offsets better growth in metal printing and healthcare (a smaller % of revenue).
Kejriwal suspects the slowdown reflects "slowing demand from the professional/production customers partly reflecting consolidation among service centers," and also "share gains by new competitors operating at lower price points."
He adds backlog only rose by $3M Q/Q, and that 3D's gross margin drop "suggests pricing pressure in Printers and perhaps even in Services." 3D predicted on its CC (transcript) printer and materials margins would begin to recover in Q3, and that service margin expansion would continue thanks to Quickparts, software, and healthcare growth.
Shares now respectively go for 7.2x and 5.3x 2014E and 2015E sales.