Investment Idea: Stratasys Ltd. (SSYS)
Stratasys Ltd. (SSYS) - Investment Idea
1. Executive Summary
Stratasys (SSYS) presents an attractive investment opportunity due to its established leadership position in the growing polymer-based 3D printing market, particularly within industries like aerospace and automotive. With an increased focus on production-scale additive manufacturing facilitated by their GrabCAD platform, Stratasys is well-positioned to capitalize on the shift from prototyping to end-use part production.
2. Investment Thesis (Bull Case)
We believe Stratasys is undervalued given the following key factors:
- Market Leadership & Broad Portfolio: Stratasys boasts a diverse portfolio of 3D printing technologies (PolyJet, FDM, Stereolithography, P3) and a comprehensive range of materials, catering to diverse application needs across various industries. This breadth positions them competitively against specialized players and allows them to capture a larger share of customer spending.
- Transition to Production-Scale Additive Manufacturing: The shift from prototyping to production is driving significant growth in the 3D printing industry. Stratasys' GrabCAD Additive Manufacturing Platform and their expanding materials offerings are essential to facilitate this transition. The platform provides manufacturers with the tools to manage production-scale additive manufacturing operations efficiently.
- Strong Presence in High-Value Industries: Stratasys' strong presence in industries like aerospace, automotive, and healthcare provides exposure to high-growth, high-margin applications. These industries are increasingly adopting 3D printing for complex, customized parts, fueling demand for Stratasys' advanced solutions.
- Recurring Revenue Stream: Stratasys generates a significant portion of its revenue from materials, software subscriptions (GrabCAD), and services (installation, training, support). This recurring revenue stream provides stability and visibility, reducing reliance on hardware sales alone.
- Valuation Discount: At a market cap of $0.8B, Stratasys appears undervalued compared to peers, considering its strong market position, technological leadership, and growth potential.