3D printing solutions provider Stratasys (SSYS) has completed the acquisition of GrabCAD, a cloud-based 3D computer aided design (CAD) tool provider. GrabCAD will be integrated into Stratasys’ Global Products and Technology Group.
The current acquisition will enable Stratasys to enter the 3D CAD market which is primarily dominated by Adobe (ADBE) and Autodesk (ADSK). Also, Stratasys will be able to garner revenues from the professional and enterprise versions of GrabCAD’s Workbench tool which is chargeable. Reportedly, the Pro version of Workbench has a price tag of $59 per user per month and the Enterprise version costs up to $89 per user per month. Notably, the company has a user base of 1.5 million.
Nonetheless, Stratasys has stated that while the acquisition will not add to 2014 revenues, acquisition costs were likely to have a negative effect of 3–5 cents on its fourth-quarter earnings.
Stratasys has resorted to strategic acquisitions to diversify its offerings and expand operating markets. A strong cash balance of $502.3 million and a debt-free balance sheet enable the company to pursue strategic acquisitions.
The company is also planning to step up investment in product development and marketing to complement growth.
Buoyed by the increased adoption of its 3D technology and printers, Stratasys raised the 2014 guidance. The company also updated its long-term operational targets, which includes a 25% organic revenue growth (previous forecast 20% growth).
Also, the company expects to incur capital expenditures in the range of $50 to $70 million for increasing its manufacturing capacity to cater to the growing demand for 3D solutions and printers.
Although these investments are expected to impact margins in the short run, product launches and global expansion will help the company generate incremental sales over the long haul. Also, the company’s recent acquisitions of Solid Concepts and Harvest Technologies are expected to benefit its top line, going forward.
While expenses are expected to go up further in fiscal 2014, we consider this necessary to facilitate product enhancements and capacity increases to address growth opportunities. Moreover, considering the expanding market and Stratasys’ strong position within it, we are relatively less concerned about the competition from companies like 3D Systems Corp. (DDD), Voxeljet and The ExOne Company.
Currently, Stratasys has a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment