Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of 3-D printing and services company ExOne soared as much as 15% after its CEO Kent Rockwell announced that his company was targeting gross margins of 50% within three years, according to a Reuters report.
So what: As part of the company's plans to ramp up annual revenue output to $100 million, ExOne is planning to open three new production service centers this year: one in the U.S., one in Japan, and one in South America. ExOne plans to use the largely unmet 3-D needs of Asia and South America as its jumping-off point for rapid growth and its push toward 50% gross margins, putting it more in line with its peers Stratasys and 3D Systems which both reported gross margins of 51% last quarter. However, Rockwell was also quick to note that ExOne is an industrial printing company through and through and has no desire to enter the consumer 3-D printing market. (Breathe a sigh of relief, 3D Systems shareholders!)
Now what: Again, these are ambitious plans for a company that's made a grand total of 21 3-D printers in 12 quarters and turned its very first profit last quarter. I fail to see how expanding this quickly will go off without a hitch or without having expenses zap any chance of profits over the next few quarters. I don't disagree with CEO Kent Rockwell that Asia and South America are regions of immense opportunity, but I'd be extremely cautious with a company still very wet behind the ears.
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Is this stock 3-D gold?
3D Systems is at the leading edge of a disruptive technological revolution, with the broadest portfolio of 3-D printers in the industry. However, despite years of earnings growth, 3D Systems' share price has risen even faster, and today the company sports a dizzying valuation. To help investors decide whether the future of additive manufacturing is bright enough to justify the lofty price tag on the company's shares, The Motley Fool has compiled a premium research report on whether 3D Systems is a buy right now. In our report, we take a close look at 3D Systems' opportunities, risks, and critical factors for growth. You'll also find reasons to buy or sell the stock today. To start reading, simply click here now for instant access.
This article was originally published as ExOne's Plan to Print Big Margins Sends Shares Up 16%on Fool.com
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