On Thursday, CFRA maintained a buy rating. Stratasys Inc. (NASDAQ:) lowered its 12-month stock price target to $12 from $15 previously. The adjustment was made after taking into account the company’s first quarter performance and future sales outlook.
Stratasys reported loss per share (LPS) of -$0.02, compared to $0.02 last year, beating consensus by $0.05. Nonetheless, the company’s revenue fell 4%, with product revenue down 1.8% and services revenue down 7.3% due to a difficult capex environment.
Stratasys’ revenue decline was due to an 18.7% decline in system sales due to limited customer budgets. However, this was partially offset by a 9.6% increase in high-margin consumables, driven by robust operating rates. CFRA revised its 2024 earnings per share (EPS) estimate for Stratasys from $0.25 to $0.16, and maintained its 2025 EPS estimate at $0.35.
Despite short-term headwinds due to a cycle of disinvestment that is expected to extend into the second half of 2024, Stratasys has secured a significant customer following: toyota (NYSE:), BAE Systems (LON:) and Lockheed for the F3300 pipeline. This suggests strong prospects for the company’s future. Additionally, Stratasys increased its gross margin by 130 basis points to 48.6%, driven by a higher mix of consumables sales and portfolio optimization.
Going forward, Stratasys is expected to continue its strategic shift toward higher-margin materials and software, which is expected to drive continued profitability improvement. This strategic pivot could see gross margins increase to the 49%-49.7% range as the company builds operating leverage.
InvestingPro Insights
In the current financial environment, Stratasys Inc. (NASDAQ:SSYS) presents interesting strengths and challenges. A notable InvestingPro tip highlights that Stratasys has more cash than debt on its balance sheet, providing some financial stability in uncertain times. Despite recent downward revisions by analysts for future periods, there are expectations for net income growth this year, indicating potential for recovery and growth.
InvestingPro Data highlights the complexity of Stratasys’ situation, with a market capitalization of $637.52 million and a negative P/E ratio, reflecting investor concerns about profitability. However, the company’s price-to-book ratio, which stood at 0.72 over the last 12 months as of Q4 2023, suggests that the stock may be undervalued relative to its assets. Moreover, Stratasys is trading near its 52-week low, which could represent a buying opportunity for long-term investors who believe in the company’s strategic shift into higher-margin materials and software.
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