Technology companies are faced with various marketing and macro-economic challenges as they release their Q3 earnings. Analysts weigh in on Stratasys, Ltd. (NASDAQ:SSYS) and Enphase Energy Inc. (NASDAQ:ENPH) as the companies report how they were impacted by these factors.
Following yesterday’s third quarter earnings report from Stratasys, Robert Burleson from Canaccord Genuity weighed in on the stock. Burleson reiterated a Hold rating for Stratasys, leaving his earlier price target of $26 unchanged.
Stratasys, a manufacturer of 3D printers and 3D production systems, reported revenues of $167.6 million and EPS of $0.01, as compared to the company’s previous estimates of $167 million and $0.00 respectively, and analyst estimates of $172.9 million and $0.02 respectively. The reported revenue figure marks an 18% year-over-year decrease.
Burleson attributes the fall in revenue to lower-than-expected unit sales of MarketBot, the 3D printing company acquired by Stratasys in 2013, and overall market challenges faced by the company during the quarter. The analyst also highlights that third quarter gross margins of 50.8% dropped from the 58.4% experienced last year. The key reason behind this decrease was “an unfavorable product mix with lower higher end system sales.”
Burleson attributes the earnings report to the macro challenges experienced by the company during the period combined with weaker capital equipment spending in key verticals. He added, “The headwinds faced during the quarter were a continuation of challenges experienced in the first half of 2015.”
Looking forward, Burleson states the company expects market challenges to continue for the rest of 2015. The company’s initial Q4 revenue guidance of $160- $175 million and EPS of -($0.17-0.06) fall below Burleson’s prior estimates of $185 million and $0.07, respectively, and consensus expectations of $191.3 million and $0.15, respectively.
Robert Burleson has rated Stratasys’ stock 18 times with a success rate of 7% and an average loss on the stock of -28.2% per rating. Out of the 9 analysts polled by TipRanks who have rated Stratasys in the last 3 months, 5 have given it a Buy rating, 3 have rated it as Hold and only 1 analyst has assigned it a Sell rating. The average 12 month price target for the stock is $30.75, an upside of 10.18% over current levels.
Enphase Energy Inc.
Earlier this week, Enphase Energy announced its results for 3Q15. The company designs, develops, manufactures and sells microinverter systems for the solar photovoltaic (PV) industry. Following their earnings announcement, Colin Rusch from Oppenheimer weighed in on the stock. Rusch reiterated an Outperform rating on the stock, but lowered his price target to $7 from his earlier target of $9.
In his report to investors, Rusch talks about Enphase’s guidance for an inventory correction in 4Q15. The company announced a “fundamental change in pricing, market share, near-term target model with lower GM targets at 23%-26% in 4Q:15, and a restructuring of the sales channel.” While Rusch acknowledges the long-term potential of these moves, he says the company will have to prove its cash management abilities in the short term.
Referring to the company’s upcoming Gen 5 product, the fifth generation microinverter, Rusch hopes it will provide “as much as 35%-40% cost reduction potential.” Rusch says Q315 revenues of $103 million aligned with Street estimates. However, GM of 30.9% fell below Street estimates of 31.9%.
The analyst also highlights the disappointing guidance for 4Q15. The company has guided revenues of $62 million to $70 million against Street estimates of $110 million. The GM guidance of 23%-26% is also lower than Street estimates of 30.8%.
Based on 7 ratings for ENPH, Rusch has a success rate of 29% for the stock with an average loss on the stock of -22.4% per rating. Out of 5 analysts polled by TipRanks who have recently rated Enphase Energy, 3 have preferred to stay on the sidelines, with 1 each giving a Buy and Sell rating. The average consensus price target for the stock is $4.33, an upside of 82.70% over current levels.