3D Systems’ DDD shares have lost 19.9% over the past month, underperforming the broader Zacks Computer and Technology sector’s 2.3% rise.

The underperformance can be attributed to the sluggish demand for new printing systems, which led to an 8.8% year-over-year revenue decline of $112.9 million. This decline was due to macroeconomic and geopolitical uncertainties, which have caused customers to reduce capital expenditures (CapEx) for expanding factory capacities. These headwinds have directly impacted the adoption of DDD’s hardware products.

Despite the challenges, 3D Systems remains focused on continuous innovation, robust portfolio, operational efficiencies and growth in healthcare sectors.

So, should investors consider DDD stock based on these factors? Let's find out.

DDD Thrives on Strong Portfolio and PartnerBase

DDD is expanding its footprint in the high-performance automotive market through a partnership with Sauber Motorsports. The collaboration includes eight SLA 750 dual laser printers and two PSLA 270 platforms, all using industry-leading materials. This integration positions 3D Systems to lead the way in photopolymer applications.

In the third quarter of 2024, 3D Systems introduced QuickCast Air, a new casting solution aimed at the investment casting market, particularly for aircraft and rocket propulsion systems. This casting method is critical for high-performance applications and is expected to reach a market size of nearly $34 billion over the next decade.

3D Systems achieved a significant milestone in the commercialization of its Oqton Industrial MOS platform through its partnership with Baker Hughes. The platform has demonstrated impressive results, including a 98% reduction in active monitoring engineering time, saving 136 engineering hours per printer annually, and an 18% cost reduction in scrap due to real-time actionable alerts during component production.

DDD further expanded its EXT family, which now includes the 1270, 1070 and the newest 800 model. This hybrid solution integrates pellets, filaments and traditional CNC machining in a single platform, offering cost-effectiveness and exceptional speed.

DDD’s Healthcare Initiatives Aid Prospects

In the third quarter, Healthcare revenues rose 5% year over year to $55.1 million, led by strong growth in Dental and Personalized Healthcare solutions. 

3D Systems' healthcare business continues to show significant growth, with the expansion of its orthopedic surgical planning portfolio. The recent FDA clearance for its total ankle patient-matched guides, which will work alongside Smith & Nephew’s total ankle replacement solution, strengthens the company’s position in the patient-specific surgical solutions market.

This expansion is significant in a market that is expected to grow to more than $5 billion in the coming years. By integrating advanced technology into orthopedic surgery, 3D Systems aims to capitalize on this growing demand and improve patient outcomes, thereby further solidifying its presence in the healthcare sector.

Earnings Estimate Revision Shows Downward Trend

For 2024, the company expects revenues to be between $440 million and $450 million, which implies a mid-to-high-single-digit percentage sequential recovery.

The Zacks Consensus Estimate for revenues is pegged at $444.69 million, indicating a year-over-year decline of 8.89%. The consensus mark for earnings is pegged at a loss is 47 cents per share and has remained unchanged over the past 30 days.

How Should Investors Play DDD Stock?

3D Systems’ Value Score of F indicates a stretched valuation.

DDD currently suffers from challenging macroeconomic conditions, weak customer demand and stiff competition. Based on these factors we recommend investors maintain a hold position on DDD stock. Awaiting improved market conditions and more favorable entry points may yield better investment opportunities.

The company currently has a Zacks Rank #3 (Hold).

Key Picks

Garmin GRMN, NVIDIA NVDA and Broadcom AVGO are some better-ranked stocks in the broader tech sector. Each of the stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Garmin, NVIDIA and Broadcom is currently pegged at 21.60%, 20% and 16.52%, respectively.

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