This article is part of a Real Money series on 20 companies investors should consider adding to their distressed watch list.
Thursday was a big day for the struggling 3-D printing industry, with 3D Systems (DDD) surging nearly 7% as much of the market was impressed by a peek into quarterly sales.
3D Systems is on Real Money's distressed watch list after falling into a sluggish growth picture, losing $41 million over the last four reported quarters, pulling down shares 73% over the past 12 months. Compounding its vanishing earnings, the company has about $9 million in debt.
Peers in the industry for synthesizing three-dimensional computer designs also jumped, with ExOne (XONE) up 7% in afternoon trading, while Stratasys (SSYS) and Voxeljet (VJET) traded up roughly 2% and 4%, respectively.
Part of the reason for 3D Systems' rise is the company's 21% forecast of year-over-year sales increases, according to Pacific Crest Securties analysts Weston Twigg and Daniel Baksht.
"3D Systems expects to report fourth-quarter revenue of $183 million, a sequential 21% increase in revenue, better than our estimate of $156.9 million and the consensus estimate of $160.2 million," the analysts said in a Thursday investment note. "The company offered no context for the higher revenue, and it gave no indication of profitability, so it's hard to pinpoint whether the higher revenue level reflects the beginning of a demand rebound or some end-of-year clearing of inventory."
Such a revenue turnaround would be a much-needed landmark for the Rock Hill, S.C.-based company that didn't turn a profit in a single quarter last year. Management, nevertheless, is confident that renewed drives into markets such as health care will be the key to growth.
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"We're disappointed with our overall results and the lower revenue from our 3-D printing products and services, which we believe were negatively impacted by continued challenging market conditions that extended customers' capital investment cycles and reduced demand across all geographies," CEO Andrew Johnson said on 3D Systems' third-quarter earnings call with analysts last year. "However, despite these challenging conditions, we still observed a few bright spots."
Investors appeared on Thursday to be confident that some of these bright spots will emerge on 3D Systems' fourth-quarter earnings call on Feb. 29.
For more on Real Money's 20 distressed companies to watch:
Stressed Out: Introducing Real Money's Distressed Index
Stressed Out: Sprint Is Collapsing Under the Weight of Its High-Yield Debt
Stressed Out: 3-D Printing and Semiconductors Are Getting Slammed
