ExOne Co (XONE), 3D Systems Corporation (DDD): The Stock Downtrend Provides an Opportunity

All major 3D printing stocks took a hit on Thursday and you might be wondering why and, does this provide an opportunity for investors? Is it a good time to chip into an industry expected to be amongst the most disruptive ones to arise over the next several years?

The ExOne Co (NASDAQ:XONE)’s stock fell 9% on Thursday, continuing a downtrend that started last week. Since Wednesday September 3^rd, the company’s stock plummeted from almost $70 a share to $57 on Thursday’s afternoon. Yesterday’s drastic drop followed the company’s announcement of the pricing of an underwritten public offering of 2,656,000 shares of its common stock at a price of $62.00 per share. This issuing of new stock increases the share count by 20%, diluting previous stockholders, who are not very happy.

3D Systems Corporation (NYSE:DDD)’s stock also sank by 3.5% during the day, after the company’s purchase of The Sugar Lab, a micro-design firm that creates edible confections –using 3D printers- made out of sugar, and the launch of Bespoke Modeling(TM), a cloud-based 3D design and printing service for healthcare professionals.

Finally, Stratasys, Ltd. (NASDAQ:SSYS) fell 5%, compounding a total descent of 11% over the last week. The downtrend surrounded the announcement of a proposed public offering of 4 million ordinary shares, proposed as a short-term solution for a period of losses.

So, one question arises: do these price drops open an attractive entry point for investors in any of the leading companies in the 3D printing industry?

In general, the 3D printing segment will benefit from declining prices and increasing exposure to consumer markets going forward. McKinsey Global Initiative, the research firm, expected the yearly economic impact of 3D printing technology to reach at least $550 billion by 2025.

In particular, 3D Systems Corporation (NYSE:DDD) and Stratasys, Ltd. (NASDAQ:SSYS), the largest players in the U.S., seem poised to outperform their peers. With consensus annual EPS growth rates around 20% and 30% respectively (expected for the next 5 years), these companies look like interesting investments. Both of them seem quite moated, armed to keep competitors at bay, in account of “the combination of proprietary materials and differentiated printer units” (Morningstar). Proprietary rights over the materials that their machines use are crucial to the predictability and stability of the companies’ incomes.

Because buying two competing stocks could seem a bit senseless, I find it important to highlight that 3D Systems Corporation (NYSE:DDD) and Stratasys, Ltd. (NASDAQ:SSYS) serve different market segments. While the first one is increasingly oriented towards consumer markets, the second one dominates the professional market.

Although both companies trade at considerable premiums to industry average valuations, the current price points make an attractive entry point available for long-term investors.

Disclosure: Javier Hasse holds no position in any stocks mentioned

Recommended reading:

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ExOne: Can The Offer Turn The Business Around?

Disclosure: none