What’s Up with Stratasys (SSYS)?

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What is the story with Stratasys (SSYS)?

On Wednesday Stratasys Ltd. (SSYS) warned that the company would miss earnings targets next month.  This news sent the stock price plunging 17% to around $40 a share, a level it has not seen since early 2012.  Twelve months ago the stock price had hit an all-time high of $135.  What could push a stock down this hard and fast?

 

First off, SSYS has been in a down trend for the past year, since hitting that all-time high.  The company, like its competitor 3D Systems Corportation (DDD), in the adolescent industry of 3D printing, has been on a buying spree acquiring companies that hopefully will make them more competitive and efficient as they find their footing with their evolving product lines.

 

The Competition

3D Systems is a more consumer-oriented company, with it’s focus on appealing to the masses. It’s printers are available at office products stores for anyone like you and me to purchase and operate.  Stratasys seems to be more focused on the medical industry as its customer.  Every medical ‘miracle’ I read about, where a doctor has solved a very specific problem for a patient, a congenital defect where the patient needed a very precise implant or biological solution that was commercially unavailable before, they were able to fabricate one using a Stratasys device.  This is akin to the orphan drug status of the pharmaceutical industry. And this is just one use of their systems.

 

One of the early customer base strategies for Stratasys systems is helping dentists create dental solutions in office, which one day may help them become less reliant on outside labs for some procedures.  Many doctors and hospitals employ the Stratasys technology to create one of a kind medical solutions for their patient’s unique and hard to fit prosthetic or implant needs.  For these unusual patients, 3D Printer technology is a literal life saver.

 

Missing earnings is common for companies that are undergoing massive changes or developing and refining new technologies that also involve the education of their market.  In the case of Stratasys, revenue growth has been stellar, but the costs have been steep and have taken a toll.  For a short time the company was profitable, and I believe will be profitable again in the near future.

 

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Elaine Dee has been trading stocks and options for over a decade, focusing on momentum stocks with strong fundamentals and revenue growth. Elaine loves studying company metrics and learning about exciting new technologies and products that drive high-growth stocks. While she enjoys a bit of day trading, she focuses more on swing trading and longer term holds using covered calls to generate cash in lieu of dividends. Before becoming a stay at home mom Elaine worked for 15 years as a mainframe computer programmer. She lives in Arizona and enjoys hiking, bicycling, traveling and her new hobby, growing hybrid tea roses. Legal Disclaimer – This is not meant to be a recommendation to buy or to sell securities nor an offer to buy or sell securities. Before selling or buying any stock or other investment you should consult with a qualified broker or other financial professional. The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author has no business relationship with any company whose stock is mentioned in this article nor is receiving compensation from any of the companies mentioned.

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