3D Systems to Sell On Demand Manufacturing Business for $82M; Shares Fall

3D Systems Corp (DDD) inked a deal to sell its On Demand Manufacturing business to a private equity firm, Trilantic North America, for $82 million. Following the announcement, shares of the company fell 1.2% to close at $29.05 on June 1.

3D Systems engineers, manufactures, and sells 3D printers, 3D printing materials, 3D scanners, and offers a 3D printing service. The deal is expected to close in Q3.

3D Systems’ On Demand Manufacturing business will be rebranded as Quickparts under the new ownership.

The proceeds from the sale are expected to be reinvested in the core manufacturing business in a bid to expedite growth and expand profits.

3D Systems CEO Dr. Jeffrey Graves said, “We are continuing to aggressively execute our four-phase plan that we announced a year ago, to position the company for exciting growth and profitability as the market for industrial-scale additive manufacturing continues to expand.”

Graves further added, “Our sole reason for divestiture is to enable our entire focus and investment priorities to be on additive manufacturing (AM), where we play a unique leadership role in enabling industrial-scale AM adoption across a range of exciting end markets. With a very strong balance sheet and cash position, proceeds from the sale will be used to further accelerate our investments for growth in our core additive manufacturing capabilities, for which we are seeing rapidly rising demand in new, extraordinary applications ranging from the human body to electric vehicles and space travel.” (See 3D Systems stock analysis on TipRanks)

On June 1, Needham analyst James Ricchiuti maintained a Hold rating on the stock.

Ricchiuti said, “The planned divestiture is consistent with new management’s previously stated plans to realign the portfolio by moving away from non-core businesses and focusing on the company’s core additive manufacturing business. We will likely adjust our estimates following the Q2 results to reflect the planned divestiture pending additional information from the company.”

Overall, the stock has a Hold consensus rating based on 1 Buy, 4 Holds, and 1 Sell. The average analyst price target of $25 implies 13.9% downside potential from current levels. Shares have increased almost 200% over the past six months.

3D Systems scores a 7 of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market averages.

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