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On Friday, Craig-Hallum analyst Greg Palm adjusted the price target on 3D Systems (NYSE:DDD) to $2.50, down from the previous target of $4.00, while maintaining a Hold rating on the company’s shares. The stock, currently trading at $2.09 with a market capitalization of $283 million, appears undervalued according to InvestingPro analysis. Palm’s analysis acknowledges recent strategic moves by 3D Systems aimed at improving profitability and cash flow, including an additional $50 million in cost reductions.
These cost-cutting measures are anticipated to enhance gross margins and decrease annual operating expenses by approximately $30 million. Despite a challenging macroeconomic environment, which is expected to persist, Palm notes that 3D Systems is on a trajectory to potentially reach breakeven EBITDA by Q4.
The report also points to concerns over the impending maturity of the company’s convertible debt, which is likely to continue affecting the stock. However, there is an expectation of a notable improvement in the company’s balance sheet following the closure of the Geomagic business sale, which is projected to bring in roughly $100 million in proceeds, anticipated to occur in early April. The company maintains a current ratio of 3.08, indicating sufficient liquid assets to meet short-term obligations.
Palm concludes by stating that while there are positive developments, the decision to stay on the sidelines is prudent at this time. The lowered price target reflects a cautious outlook, taking into account both the potential financial improvements and the existing challenges that 3D Systems faces. The stock has declined 34.45% year-to-date, with InvestingPro analysis showing high price volatility and significant downward pressure in recent months.
In other recent news, 3D Systems reported its fourth-quarter and full-year 2024 earnings, revealing a larger-than-expected loss and a decline in revenue. The company posted a non-GAAP earnings per share (EPS) of -$0.19 for the quarter, missing the forecast of -$0.10. Total (EPA:TTEF) revenue for the fourth quarter was $111 million, which was below the expected $115.6 million and represented a 3% decline year-over-year. The Healthcare Solutions segment experienced a 21% decrease in revenue, while the Industrial Solutions segment saw an 11% increase. Despite these challenges, Cantor Fitzgerald maintained an Overweight rating on 3D Systems, highlighting increased sales of new industrial printer systems and a resurgence in consumable sales. The firm also noted an accounting adjustment in the Regenerative Medicine program that reduced Healthcare Solutions revenue by $8.7 million. Looking ahead, 3D Systems aims to achieve breakeven or better adjusted EBITDA by the fourth quarter of 2025, focusing on cost reduction and operational efficiency.
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