Stratasys , once a 3-D printing darling, delivered solid quarterly results, prompting J.P. Morgan analyst Paul Chung to upgrade his rating on the stock to Neutral from Underweight.
After Monday's market close, Stratasys (ticker: SSYS) reported first-quarter earnings of two cents per share, much higher than estimates of four cents in loss, according to FactSet data. Revenue of $163.4 million was also ahead of the $157.4 million expected and was the company's highest first-quarter revenue in six years.
The stock was up 13%, at $19.30, in recent trading, while the S&P 500 was up 1.5%. Chung's price target is $23, down from $25, based on lower market multiples across J.P. Morgan's coverage.
In its earnings call, management pointed to strength from sales of its Origin and H350 3-D printers in the first quarter and said it raised prices to mitigate cost pressures.
The company expects adjusted earnings of 14 to 19 cents per share in 2022, in line with Chung's estimate of 17 cents and the Street's call of 16 cents. Full-year revenue is expected to be between $685 million and $695 million, while analysts predicted $686.5 million, or on the lower end of the guided range.
From a gross margin perspective, Stratasys continues to expect 2022 to be flat to slightly higher compared with 2021, with the second half stronger, based primarily on higher revenue. Other growth drivers include partnerships with aerospace company Lockheed Martin (LMT) and auto company Radford Motors.
Talking about the offerings, Stratasys CEO Yoav Zeif said, "We're not satisfied with anything. For each one of our technologies, we have a five-year road map to make sure that we will be at the front of this technology for many years to come."
Chung said he's "incrementally constructive" on the results. He said he senses that the firm is confident in the product lineup and in demand trends, and is keeping gross margins flat despite a tough macro environment.
Stratasys saw its peak back in 2013 when its stock was hovering around or over $100 for most of the year. It has declined considerably since then largely due to competitive headwinds from HP (HPQ) entering the 3-D printing market. Other competitors include 3-D Systems (DDD).