Stratasys Ltd. (SSYS) is set to report fourth-quarter 2014 results on Mar 2. Last quarter, it posted an 8.89% positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors to Consider
Recently, Stratasys lowered the 2014 guidance and issued weaker-than-expected 2015 outlook. The company lowered the 2014 guidance to reflect an anticipated goodwill impairment charge and slower revenue growth at its MakerBot business.
Stratasys now projects 2014 revenues within the $748–$750 million range, down from $750–$770 million. This represents year-over-year growth of approximately 54%, including 31% organic growth. Furthermore, the company lowered the non-GAAP earnings forecast to $1.97–$2.03 per share from $2.21–$2.31.
According to Stratasys, fourth-quarter results are likely to be negatively impacted by slower revenue growth at the MakerBot business. Challenges associated with the introduction and scaling of its new product platform and rapidly evolving distribution model primarily affected the MakerBot business.
Apart from lowering the 2014 guidance, Stratasys provided weaker-than-expected outlook for 2015. The company expects revenues to range within $940 to $960 million, lower than the Zacks Consensus Estimate of $1.21 billion. The company also expects non-GAAP earnings of $2.07 to $2.24 per share.
In a recent research report, PricewaterhouseCoopers predicted that 3D printing technologies will take giant strides over the next three to five years, gaining relevance in manufacturing, commercial, military and complex weapon parts and system components.
Additionally, TechNavio forecasts that the global 3D Printer market will grow at a CAGR of 45% (2014–2019). Being the 3D printing industry leader, Stratasys is well poised to grab maximum market share given its sizable installed base.
However, rapid growth is bringing financial pressures in its wake, as the company has to constantly invest in research and development and raise funds for acquisitions. Moreover, stiff competition in the industry, amid persisting economic uncertainty, coupled with foreign currency risks are likely to have a negative impact on the to-be-reported quarter results.
Moreover, our proven model does not conclusively show that Stratasys will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. However, in this case, the stock has an ESP of -14.63% and carries a Zacks Rank #5 (Strong Sell).
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum. In this case, Stratasys has seen 3 downward revisions for the current quarter over the 30 days and no upward revision.
Stocks to Consider
Here are some companies which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Amarin Corporation plc (AMRN), with an Earnings ESP of +14.29% and a Zacks Rank #2 (Buy).
Endo International plc (ENDP), has an Earnings ESP of +0.89% and a Zacks Rank #2.
Pattern Energy Group Inc. (PEGI), with an Earnings ESP of +420.0% and a Zacks Rank #3 (Hold).
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
Be the first to comment