Stratasys Ltd. SSYS recently took over Germany-based RTC Rapid Technologies GmbH, one of its key partners. The financial terms of the deal, which will strengthen its position in the German Speaking Countries (GSC) of Germany, Switzerland and Austria, were not disclosed.
Post acquisition, Stratasys will continue to offer its full range of 3D printing solutions and services to RTC. The company also stated that it will work with RTC’s regional resellers to capitalize on growth opportunities through sales and marketing, application support and customer service expertise.
RTC has been one of Stratasys’ key European partners since 2003 and helped it to grow in the GSC. The company believes that the acquisition will facilitate it to better serve the existing customers and develop business in the region, thereby boosting the top line.
Over the past few months, Stratasys has been witnessing sluggish product demand as can be seen from dismal first-quarter 2015 results. The company stated that decline in capital spending by clients, particularly in North America due to uncertain economic conditions, and unfavorable currency exchange rates negatively impacted its results.
Therefore, in May, Stratasys announced business restructuring plans to improve the 3D product portfolio and expand its presence in the professional, education and consumer markets. We believe that the recent acquisition is in line with the restructuring plans.
Prior to this, in mid-June, Stratasys spun off the Bold Machine unit into a separate entity headed by MakerBot founder, Bre Pettis. Though the actual reason behind the spin-off is unclear, we believe that this could be an attempt by the company to provide a platform to speed up the design and therefore, commercialization of 3D products.
Once only a subject of conjecture, 3D printing’s potential to revolutionize manufacturing is fast becoming a reality. Companies are now working on solutions that range from simple make-to-stock orders to complex engineer-to-order production strategies. According to a report by Canalys, an independent research firm, the industry is forecast to grow a whopping 56% in total sales this year, reaching $5.2 billion from $3.3 billion last year.
However, rapid growth comes at the cost of financial pressure, as the company has to constantly invest in research and development as well as raising funds for acquisitions. Moreover, stiff competition in the industry, persisting economic uncertainty and foreign currency risks remain the concerns.
Currently, Stratasys carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are Ambarella Inc. AMBA, eMagin Corp. EMAN and Avago Technologies Ltd. AVGO. While Ambarella and eMagin sport a Zacks Rank #1 (Strong Buy), Avago has a Zacks Rank #2 (Buy).
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