Fresh Competition Awaits Stratasys, Ltd. (NASDAQ:SSYS) From HP Inc (NYSE:HPQ)

It might no longer be business as usual for Stratasys, Ltd. (NASDAQ:SSYS) in the coming years as HP Inc (NYSE:HPQ) enters the 3D printing business scene. HPQ is expected to start rolling out its 3D printing systems in mid-2016 and its coming to the scene is likely to complicate competition landscape for Stratasys and 3D Systems Corporation (NYSE:DDD).

Because of soft demand and long sales conversion cycles, Stratasys, Ltd. (NASDAQ:SSYS) could not keep profits flowing in 3Q, thus reporting a net loss of $938 million or 18.06 per share. The loss was realized on revenue of $167.6 million, which also weakened compared to $203.6 million reported in the same quarter last year. On an adjusted basis, Stratasys managed to mitigate its losses, reporting a positive income of a penny a share. The massive net loss of $938 million for 3Q came as a result of property write-off to the tune of $910.

Although the loss in 3Q might be blamed on the one-time hit result from the write-down in the Makerbot unit, it doesn’t look like Stratasys, Ltd. (NASDAQ:SSYS) will face less trouble in the future.

HPQ disruption

Part of the reason the future could be complicated for both Stratasys, Ltd. (NASDAQ:SSYS) and 3D Systems is that HPQ is set to increase competition in the 3D printing systems space. HPQ is widely expected to start pushing out its 3D printers in 2016. It is speculated that part of the reason Stratasys and 3D Systems are battling soft demand for their 3D systems is that customers have held back spending on the technologies, perhaps waiting for the coming of HPQ to trigger more favorable pricing. If HPQ comes up with superior 3D printing systems at more affordable prices than rivals, both 3D Systems and Stratasys could find it difficult to recover sales.

Soft margins

However, HPQ, Stratasys and 3D Systems could all struggle with lower profit margins in the 3D printing business as competition pushes down prices.

4Q guidance

Stratasys, Ltd. (NASDAQ:SSYS) has guided 4Q loss per share in the range of -$0.17 to -$0.06 on revenue $160 to $174 million.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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