Brean Capital Comments On Stratasys Following Yesterday’s Earnings Conference Call


Brean Capital analyst Ananda Baruah came out today with a research note on Stratasys (NASDAQ:SSYS), following yesterday’s conference call where management provided additional details on the company’s fiscal 2014 results. The analyst rates the stock a Hold. No price target was provided.

Baruah commented: “After speaking with holders, we believe there could be a period of digestion selling as folks reposition their theses. With regards to potential downside, we believe ~$45 – $50 is a reasonable range, as 20x X $2.15 = $43 (SSYS ’15 EPS guide) and 20x X $2.50 = $50 (a reasonable ’16 EPS estimate).”

The analyst continued, “We believe an important sticking point with investors is that it remains challenging to reconcile SSYS’ 2 – 3 year revenue growth comments in the context of their incremental Opex spending, even while acknowledging that SSYS is historically a very conservative revenue growth guidance company. As such, we believe folks are being left with the impression that the material increase in Opex $ is required to generate growth that could be 500bp – 1000bp lower that the 35%+ of the last twelve months. We frankly would have anticipated greater enthusiasm on the call regarding L-T growth potential given the material increase in Opex spending.”

Stratasys Ltd. provides additive manufacturing (AM) solutions for the creation of parts used in the processes of designing and manufacturing products and for the direct manufacture of end parts.