Stressed Out: 3-D Printing Stocks Rocket on Surprise Beat

 | Mar 14, 2016 | 3:15 PM EDT
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This article is part of a Real Money series on 20 companies investors should consider adding to their distressed watch list.

Shares of 3-D Systems (DDD), a member of Real Money's "Stressed Out" index, skyrocketed Tuesday on results that soundly beat expectations.

Shares of the Rock Hill, S.C.,-based company were up 26% in afternoon trading, following news that the manufacturer of 3-D printing technology beat Wall Street quarterly earnings estimates by 588%, with non-GAAP income of $21 million surprising shareholders and analysts alike.

The 3-D world has been on the fritz as demand has cooled under the weight of high debt financing. It has been an especially tough road for 3D Systems; its shares are down 47% from a year ago, even with Monday's gains. Meanwhile, competitor Stratasys (SSYS), which is trading down 56% over the last 12 months, saw shares tick up nearly 4% in afternoon trading Monday.

"Challenging conditions continued into the fourth quarter, contributing to lower 3D printer sales compared to the fourth quarter of 2014," CFO David Styka said on an earnings call with analysts. "This also negatively impacted sales of materials. Professional and industrial printer units decreased 41% for the year and printers revenue decreased 26% for the year to $168.7 million. Notwithstanding these pressures, there were some positive indicators in the fourth quarter."

The primary gains included orders from healthcare and industrial customers, which helped the initial boom of the new technology in the form of customizable prosthetic device manufacturing.

Sensio to market 3-D video streaming service

"For the full year, revenue from healthcare and related applications contributed $141.1 million, an increase of 9% from 2014." Styka said. "Healthcare revenue growth was driven by a broader range of products and services, as well as the expansion by customers printing medical and dental devices."

Software was also a major growth driver in DDD's fourth quarter, with revenue from that segment increasing 121% for the full year to $78 million in 2015.

"Although, we are in a transitional period, we are not sitting still," CEO Andrew Johnson said on the earnings call. "We recognize that developments in our industry had brought heightened competition and new challenges, but there are also significant and exciting opportunities. We're taking steps to position ourselves to capitalize on those opportunities through a comprehensive review of our products, activities and strategy."

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