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Stratasys (SSYS) Completes Origin Buyout to Fuel 3D Printing

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Zacks Equity Research
·3 min read
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Stratasys SSYS announced that it has recently completed the previously announced acquisition of Origin, a San Francisco-based 3D printing start-up.

On Dec 9, 2020, the company entered into an agreement to acquire Origin in a cash-and-stock deal worth $100 million. The buyout has been funded with $55 million in cash and $45 million in stock. Stratasys has paid $60 million upfront and the remaining $40 million will be paid as performance-based earnouts over the next three years.

Notably, the company benefits from Origin’s proprietary resin-based Programmable PhotoPolymerization technology used in its manufacturing-grade 3D printer, Origin One. Moreover, the integration of Origin’s software-centric additive manufacturing solution helps Stratasys gain a competitive edge in the 3D-printed mass production parts market.

Additionally, the technology is expected to generate incremental annual revenues of $200 million within five years. Moreover, the acquisition is anticipated to be accretive to non-GAAP earnings growth by 2023, although it might have a dilutive effect on 2021 non-GAAP earnings.

Growing Product Portfolio to Fend Off Pandemic Woes

Stratasys’ shares have gained 3.9% over the past year compared with the Zacks Computer - Peripheral Equipment industry’s growth of 57.7%.

Stratasys, Ltd. Price and Consensus

Stratasys, Ltd. Price and Consensus
Stratasys, Ltd. Price and Consensus

Stratasys, Ltd. price-consensus-chart | Stratasys, Ltd. Quote

Notably, the company’s continuous initiatives to fortify its position in the 3D printing space by adding new capabilities to its 3D printing portfolio are a major growth driver.

In December 2020, Stratasys introduced several new product capabilities to aid 3D printing. It launched its application programming interface (API) program, which facilitates API connectivity between its Fused Deposition Modeling (FDM) 3D printers and enterprise software applications, using the GrabCAD Software Development Kit (SDK).

Moreover, the addition of three new Kimya ABS composite materials to MakerBot’s METHOD 3D printers, which boosts the performance of METHOD printers, is a major positive. Furthermore, the company introduced ultra-realistic simulation and realism with advanced bone capabilities to its J750 Digital Anatomy 3D printer.

However, the company’s top line was adversely impacted by pandemic-induced weakened demand for its hardware and consumables in the third quarter of 2020. Its product revenues decreased 21.4% year over year to $83.5 million.

Nevertheless, the expansion of Stratasys’ robust 3D printing portfolio along with the recent acquisition of Origin is expected to drive customer acquisition for the company, thereby boosting its growth prospects in the near term.

Zacks Rank & Stocks to Consider

Stratasys currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector are PerkinElmer PKI, 3D Systems DDD and Broadcom AVGO. PerkinElmer sports a Zacks Rank #1 (Strong Buy), while 3D Systems and Broadcom carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for 3D Systems, PerkinElmer and Broadcom is currently pegged at 26%, 19.5% and 12.9%, respectively.

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PerkinElmer, Inc. (PKI) : Free Stock Analysis Report
 
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