Stratasys Ltd. SSYS, a 3D printing company, recently entered into a strategic partnership with UK’s Manufacturing Technology Centre (MTC). The collaboration is aimed at accelerating additive manufacturing (AM) technologies and thereby strengthen manufacturing competitiveness by increasing supply chain efficiencies. However, the financial terms of the deal were not disclosed.
Started in 2011, MTC is part of the High Value Manufacturing Project, which is supported by Innovate UK. The center offers innovative manufacturing processes and technologies appropriate for both large and small companies and applicable across varied industry sectors.
Additive manufacturing is a process of joining materials to make objects from 3D model data. The main functions of additive fabrication are designing/modeling, prototyping and direct part production. The use of AM facilitates quick design change, which helps to save cost and time.
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According to Andy Middleton, President, Stratasys, EMEA, “This partnership and the integration of our technology solutions at the MTC underscores the fact that, more than ever, the UK is committed to exploring ways to bring growth to the UK economy and promote the real business benefits achievable from transformational technologies like additive manufacturing.”
The collaboration with MTC for the development of the latest Infinite-Build 3-D Demonstrator is likely to reap synergistic benefits going forward. Partnering MTC will be a positive for Stratasys.
We believe that the partnership will help Stratasys to gain competitive advantage over players like 3D Systems Corp. DDD. Moreover, the collaboration will expand and enhance Stratasys’ AM or 3D Printing Platform. This association will also help Stratasys to attract new clients and strengthen its overall market position.
The 3D printing market presents a favorable long-term investment opportunity as a large number of engineers, designers, architects and entrepreneurs are resorting to 3D solutions for their primary designing and product modeling.
According to a recent survey by Lux Research, 3D printed parts will be an $8.4 billion global market in 2025 led by automotive, medical and aerospace applications. Moreover, with the decline in cost of 3D printing as compared with traditional manufacturing, industries are increasingly adopting it in their manufacturing plants.
Data from the Wohlers Report 2014 revealed that the worldwide 3D printing industry is expected to grow from $3.07 billion in 2013 to $12.8 billion by 2018, and exceed $21 billion by 2020 at a CAGR of 34%.
As the industry leader in 3D printing, this is encouraging information for Stratasys as it should take every opportunity to grab a large share of this market.
The stock returned approximately 16.7% in the last three months, outperforming the Zacks categorized Computer-Peripheral Equipment industry’s gain of just 9.1%.
Over the years, Stratasys’ additive manufacturing solutions have been used by companies in the automotive, aerospace, defense, electronics, consumer goods, education and other sectors to improve product designs. Stratasys is also working with the U.S. Department of Energy to develop AM processes to aid in production.
This deal is a strategic move by Stratasys to expand its geographic reach and drive market penetration. The partnership brings opportunities for Stratasys’ 3D systems business and will increase its installed base. We believe that Stratasys’ portfolio of new and innovative products will help it in the long run to push up sales.
Stratasys has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the broader technology sector are Applied Materials, Inc. AMAT and Analog Devices, Inc. ADI with a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials and Analog Devices have a long-term expected earnings growth rate of 15.5% and 10.4%, respectively.
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