Brean Capital Maintains Hold Rating On 3D Systems Ahead Of Earnings


In a research report issued today, Brean Capital analyst Ananda Baruah maintained a Hold rating on 3D Systems Corporation (NYSE:DDD) with a $26 – $41 valuation range, as the company is scheduled to report its fourth-quarter and full year 2014 results on Thursday, February 26 before market open.

Baruah observed, “We look for DDD to provide a prudent ’15 revenue and EPS guide (with OM expansion) that will allow them to generate improvement from Jun Q and Sep Q ‘14 organic revenue growth of 10% – 12% and OM of 15% – 17%. As such, we look for organic revenue growth guidance of 15% – 20% (with DDD perhaps holding upside potential for 25% organic in their pocket), revenue of ~$900M +/- as a midpoint (likely in-line with Street after adjusting for the Cimatron acquisition), OM guidance of ~20%-22% exiting Dec Q ’15 (vs. 15%-17% levels in the Jun Q and Sep Q ’14), and ’15 EPS mid-point of $1.05 +/- (vs. Street of $1.02; again we don’t believe Street is adjusted for the accretive Cimatron acquisition).”

Furthermore, “We believe DDD can continue to trade in a ~25x – 40x P/E range on ’15 EPS, which places the stock at a ~$26 – $41 valuation range (based on our ’15 EPS of $1.03). Interestingly, IF DDD were to exhibit solid Operating Margin expansion moving through ’15, we believe ’16 EPS potential of ~$1.25 is achievable, which would place stock valuation at a ~$30-$50 range. Our DCF suggests a $40 valuation (Figure 2) under reasonable assumptions. As such, we actually could envision a scenario where risk/reward on the long side becomes attractive (from a valuation perspective) if the stock were to trade off <$25 coming off of a prudent guide.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ananda Baruah has a total average return of 3.9% and a 65.8% success rate. Baruah has a -29.4% average return when recommending DDD, and is ranked #955 out of 3480 analysts.