While the tech industry is under pressure from macroeconomic challenges, its long-term prospects remain bright. Rising need of 3D printing in aerospace and automotive industries is likely to enhance the growth of industry.
So, quality tech stocks Stratasys Ltd. (SSYS), Proto Labs, Inc. (PRLB) and Materialise NV (MTLS) could be worth buying.
According to Gartner, Inc., worldwide government IT spending is expected to reach $589.8 billion in 2023, an increase of 7.6% from 2022.
The global 3D Printing market is projected to grow at a CAGR of 24% to reach $117.83 billion by 2032. The rising need for 3D printing technology in industries like as aerospace, automotive, healthcare, and consumer products is propelling global revenue growth.
This technology attempts to reduce manufacturing costs, increase product quality, and accelerate development processes. Faster healing times, cheaper expenses, and improved patient outcomes help the healthcare industry.
Investors’ interest in tech stocks is evident from the Technology Select Sector SPDR ETF (XLK) 15.9% returns over the past three months.
Let us look deeper into the fundamentals of the featured stocks.
Stratasys Ltd. (SSYS)
SSYS provides connected polymer-based 3D printing solutions. It offers a range of 3D printing systems, Fused Deposition Modeling (FDM) printers, stereolithography printing systems, origin P3 printers, and SAF printers for manufacturing, tooling, rapid prototyping, and various vertical markets.
On June 22, 2023, SSYS announced that Peugeot has integrated Stratasys’ innovative 3DFashion™ technology into the interior of its new Inception concept, creating a level of resolution not feasible with standard ornamentation methods.
SSYS’ forward EV/Sales multiple of 1.28 is 55.6% lower than the industry average of 2.89. Its forward Price/Sales multiple of 1.27 is 68.2% lower than the industry average of 4.
SSYS’ operating expenses came in at $82.19 million, down 7.9% in the fiscal first quarter that ended March 31, 2023. Its total current liabilities came in at $202.15 million for the period that ended March 31, 2023, compared to $210.65 million for the period that ended December 31, 2022.
Also, its total liabilities came in at $292.63 million, compared to $300.36 million in the same period.
The consensus revenue estimate of $695.78 million for the year ending December 2024 represents a 8.2% increase year-over-year. Its EPS is expected to grow at 143.7% year-over-year to $0.41 for the same period. It surpassed EPS estimates in all four trailing quarters. SSYS’ shares have gained 42.65% over past six months to close the last trading session at $16.33.
SSYS’ POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
SSYS has a B for Growth and Momentum. Within the Technology - 3D Printing industry, it is ranked #3 out of 7 stocks. Click here for the additional POWR Ratings for Stability, Value, Sentiment, and Quality for SSYS.
Proto Labs, Inc. (PRLB)
PRLB operates as a digital e-commerce manufacturer of custom prototypes and on-demand production parts worldwide.
PRLB’s forward EV/Sales multiple of 1.61 is 6.8% lower than the industry average of 1.73. Its forward Price/Book multiple of 1.02 is 59.9% lower than the industry average of 2.55.
PRLB’s trailing-12-month CAPEX/Sales of 4.50% are 57.5% higher than the industry average of 2.86%. Its trailing-12-month levered FCF margin of 11.64% is 123.3% higher than the industry average of 5.21%.
PRLB’s total revenue increased 7.1% year-over-year to $125.86 million in the fiscal first quarter that ended March 31, 2023. The company’s 3D printing revenue came in at $21.33 million, up 8.4% year-over-year.
Also, its total current assets came in at $188.72 million for the period that ended March 31, 2023, compared to $186.57 million for the period that ended December 31, 2022.
Analysts expect PRLB’s revenue to increase 5.8% year-over-year to $533.89 million for the year ending December 2024. Its EPS is expected to grow at 30.3% year-over-year to $1.56 for the same period. It surpassed EPS estimates in three of four trailing quarters. The stock has gained 34.6% over the past six months to close the last trading session at $33.33.
PRLB’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It is ranked first in the same industry. It has an A grade for Momentum and a B for Growth, Value and Quality. To see additional PRLB’s ratings for Sentiment, and Stability, click here.
Materialise NV (MTLS)
Headquartered in Leuven, Belgium, MTLS provides additive manufacturing and medical software, and 3D printing services in the Americas, Europe and Africa, and the Asia-Pacific. The company operates through three segments: Materialise Software; Materialise Medical; and Materialise Manufacturing.
On May 30, 2023, MTLS and Vuzix® Corporation (VUZI), a leading supplier of Smart Glasses and Augmented Reality (AR) technology and solutions, have launched a partnership endeavor to use 3D printing technology to speed the design and production of smart eyewear.
The agreement will allow third-party technology, sports, and entertainment firms to quickly bring functional, fashionable, and cheap smart eyewear to customers by utilizing Vuzix’ OEM components and designs, shortening the average manufacturing cycle from 18 months to just three.
MTLS’ forward EV/Sales multiple of 1.48 is 48.6% lower than the industry average of 2.89. Its forward Price/Sales multiple of 1.74 is 37.5% lower than the industry average of 2.78.
MTLS’ trailing-12-month ROTA of 0.36% is significantly higher than the industry average of 0.02%. Its trailing-12-month gross profit margin of 55.82% is 13.4% higher than the industry average of 49.24%.
MTLS’ revenue increased 24.4% year-over-year to €65.89 million ($71.65 million) in the fiscal first quarter that ended March 31, 2023. The company’s gross profit increased 27.5% year-over-year to €36.84 million ($40.06 million). Also, its adjusted EBITDA increased 89.4% year-over-year to €10.31 million ($11.03 million).
Street expects MTLS’ revenue to increase 10.5% year-over-year to $315.15 million for the year ending December 2024. Its EPS is expected to grow at 73.1% year-over-year to $0.25 for the same period. Over the past three months the stock has gained 8.5% to close the last trading session at $8.39.
MTLS has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Sentiment and a B for Growth and Value. It is ranked #2 in the same industry.
Beyond what is stated above, we’ve also rated MTLS for Stability, Sentiment and Momentum. Get all MTLS ratings here.
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SSYS shares were trading at $16.18 per share on Monday afternoon, down $0.15 (-0.92%). Year-to-date, SSYS has gained 36.42%, versus a 13.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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