Piper Jaffray analyst Troy Jensen in a note to clients Monday reiterated a price target of 14 on 3D Systems with a rating of overweight, the equivalent of a sell.
“We continue to believe the 3D printing industry has experienced an uptick in demand, but we remain cautious on 3D Systems given competition is intensifying and the bigger competitive risks are targeting its key products,” Jensen wrote. He thinks HP will have “a significant impact” on 3D Systems’ line of 3D printers in a category known as selective laser sintering.
3D Systems stock fell 1.8% to close at 18.35 on the stock market today.
HP made its long-awaited entry into the 3D printer market in May 2016.
The competitive threat to 3D Systems and Stratasys (SSYS) is growing as HP is rapidly expanding its 3D printer business. Stratasys and 3D Systems are the two largest 3D printer manufacturers by revenue.
Stratasys stock finished the regular session at 23.39, up 0.34%.
IBD’S TAKE: Both 3D Systems and Stratasys are far off their highs from 2014 and have weak performance ratings, based on a variety of IBD metrics. They face increased competition from HP as well as from General Electric, which purchased two European 3D printing companies last year.
Pacific Crest Securities analyst Weston Twigg in a recent research note said he recently spoke with HP’s head of 3D printing, “and traction sounds substantially better than we expected.” “The business was characterized as rapidly scaling, with 3D printing viewed as a high-growth segment.”
Stratasys last week was downgraded to a sell by Goldman Sachs on a view that ramping competition and lack of exposure to the fastest-growing technologies in the 3D printer market will weigh on profit.