HP's Rapid Growth In 3D Printers Threatens Stratasys, 3D Systems

Posted Date 06/28/17

HP Inc. (HPQ) is rapidly scaling its 3D printer business and threatens the two market leaders, 3D Systems (DDD) and Stratasys (SSYS), says a Pacific Crest report.

Pacific Crest Securities analyst Weston Twigg in a research note on Wednesday said he spoke with HP's head of 3D printing unit last week, "and traction sounds substantially better than we expected," he wrote. "The business was characterized as rapidly scaling, with 3D printing viewed as a high-growth segment."

HP made its long-awaited entry into the 3D printer market in May 2016.

"Customer feedback has been good and demand has been high since HP began scaling up operations, with many customers ordering multiple units." Twigg wrote. "The current platform is still somewhat limited in terms of materials and colors, but it is being expanded rapidly."

HP shares slipped 0.7% to close at 17.71 on the stock market today. 3D Systems was up 0.1% to 21.69. Stratasys was up 0.8% to 27.25.

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 as they face increased competition from HP as well as from General Electric, which purchased two European 3D printing companies last year.

Growth in 3D printer sales decelerated in 2016, hampered by a slowdown at 3D Systems and Stratasys, the two industry leaders by revenue. According to Wohlers Associates, 3D printer sales grew 17.4% to $6.06 billion in 2016, year over year. That's down from 26% growth in 2015.

Much of the downturn came from declines by 3D Systems and Stratasys, which together represented $1.31 billion, or 22%, of industry sales last year. Excluding Stratasys and 3D Systems, industry sales rose 25%, Wohlers said.

"While HP's effort is still early, the company appears to be gaining meaningful traction in the midrange commercial segment," Twigg wrote.

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