Re: ORGANOVO - Bio Nasdaq Impresoras 3D
No he podido con la presión: todas fuera! Llevaba las tres gracias: DDD, VJET y ONVO. Pero gracias por este maravilloso viaje que nos deparaste! Ha salido bien... Ahora se descantillan un poco...
Por si te interesa, Helm me ha pasao este análisis sobre tus DDD:
We are raising our growth expectations for the 3-D printing sector as recent product launches have attacked a key barrier to success that we have previously identified. As such, we have raised our fair value estimates for 3D Systems and Stratasys to $35 and $78 per share from $29 and $64, respectively. The primary catalyst for our adjustments has been the introduction of 3-D scanning technologies aimed at the lower end of the printing market, namely Makerbot's Digitizer and Sense from 3D Systems. Both of these technologies reduce the level of knowledge required to create 3-D models, making the printers more accessible to non-professionals. Our previous model had effectively assumed that the 3-D printing industry would reach a consumer penetration rate of roughly 1.5% in the United States in 10 years, which we now believe will be closer to 5% over the same time period. Currently, we estimate consumer sales to make up roughly 10% of industry sales, but anticipate this reaching roughly a third of industry sales by 2022, versus 18% in our previous model. This is the primary driver behind our revised fair value estimate. Our narrow economic moat rating for both firms remains intact.
Investment Thesis 11/08/2013
3D Systems currently has the broadest portfolio of 3-D printers in additive manufacturing, as well as a growing on-demand custom parts manufacturing business. The combination of proprietary materials and differentiated printer units helps the firm carve a narrow economic moat.
With products that reach from top-end production printers to one of the lowest-priced machines in the market, 3D Systems builds printers to meet a variety of market needs. The portfolio will closely follow general market adoption of the technology, and we think its exposure across materials will also help the firm navigate future technological innovations and shifts. In particular, we think growing demand for rapid prototyping products and services will be a boon to the company. The ProJet 3D printer series, as well as the recently acquired ZPrinter series, helps the company address this market.
Three-dimensional printers rely on consumable materials such as plastics, metals, and various composites to create a final product. These consumables generate gross margins nearly 20 percentage points higher than the printers themselves, making them a strong contributor to the overall profitability of the firm. To that end, around 2006, 3D Systems overhauled its product mix, making the consumables proprietary to the firm, blocking out potential third-party material sellers. This decision helped buoy profitability and we attribute recent stronger cash flow generation directly to the change. Notably, compatible materials are a key consideration for buyers, with the material restricting the durability, color, and finish of the final product.
Aside from the core printer and material business, 3D Systems has an on-demand custom parts business that generates roughly a third of revenue. While we acknowledge that this adds growth opportunities, we don't see strong barriers to entry in the business, and new entrants may weaken future profitability. That said, 3D Systems' exposure across 3-D printing end markets results in investors benefiting from the growth of the printing and not any one particular product or end market.
Economic Moat 11/08/2013
We think 3D Systems possesses a narrow economic moat due to the high customer switching costs and meaningful barriers to entry to developing a competitive product. Printer manufacturers generate revenue from two major sources: printer sales and aftermarket consumable materials. The label 3-D printer applies broadly to a range of technologies, each offering different characteristics and benefits to customers. The various technologies are individually patented, protecting the technology for a period of time. The aspiration of manufacturers is to spend enough on R&D to rebuild the product portfolio before the patents roll off, so that a copycat will be generations behind the most relevant technology.
Additionally, customers typically value machines for the materials that the printer uses and the properties of those materials. Units that can print with a variety of materials will inevitably draw attention, but are also more difficult to engineer, giving incumbents an advantage over prospective entrants. Printer units have gross margins in the 40%-50% range, which is respectable for a manufacturer, and these margins have held up, as price points have come down in recent years.
The proprietary consumables also support the narrow moat, with the materials generating a 65% gross margin stream after the sale. Successful companies have locked out third parties from finding a way to poach these profits, diminishing customers' ability to switch materials suppliers. Customers risk damaging the equipment and voiding warranties if they attempt to use a third-party material in the unit, significantly diminishing the potential cost savings of substituting materials.
Also, 3D Systems has a meaningful outsourced printing arm akin to Kinko's (FedEx Office). While margins may be strong in these segments, the highly fragmented "print for hire" market is subject to competitive pricing and limited barriers to entry; a motivated individual could simply buy a printer and open up a competing store, thereby changing the local market. Consolidation has helped to quell this, but the proliferation of printers and lower unit costs have lowered the barriers to entry, weakening the longevity of the economic profits, in our opinion. Additionally, we think 3D Systems could end up competing against its own customers because a buyer of their machine can offer a similar service with roughly the same cost base as 3D Systems.
Valuation 11/12/2013
We are raising our fair value estimate to $35 from $29 per share as a result of increased expectations for the company's ability to penetrate the lower-priced consumer market. Our former valuation assumed roughly a 1.5% penetration rate in 10 years with annual material consumption for lower-end printers at $100 per year. Due to recent product launches such as 3-D scanners by the industry at price points that are accessible to consumers, we think the technology can now reach more consumers and increase the average annual material spend. Our revised valuation assumes a 5% consumer penetration and $200 per printer per year in 10 years. Our industrial assumptions are largely unchanged. Our fair value estimate is equal to 30 times 2014 earnings and 6 times 2014 sales.
Our model assumes average annual revenue growth of roughly 22% over the next 10 years, driven by a growing installed base of printers as well as increased material consumption. We also anticipate consolidated gross margins of 55% by 2017, which reflects a larger share of materials in the revenue mix, increasing from 30% of revenue in 2012 to 35% in 2017, as well as improved margins in the service business. These positive factors are offset by continued share count dilution; split adjusted share count has grown more than 20% over the last year as the company continues to pursue growth through acquisitions. We anticipate the valuation allowance that has helped ease the tax burden during the last several years will deplete in 2014, moving the corporate tax rate to 35% longer term. We use a 11.8% weighted average cost of capital in building our discounted cash flow-based valuation.
Risk 11/08/2013
We assign a high uncertainty rating for 3D Systems as nascent demand and rapidly changing product cycles add uncertainty to our ability to project revenue and growth rates for the company. 3D Systems is highly leveraged to research and development, which traditionally has been a discretionary expense for corporations. During cycle lows, customers cut back on R&D spending to preserve profitability, which negatively affects 3D Systems. The company is also exposed to a number of geographies, introducing geopolitical risk as well as intellectual property risk. As additive manufacturing takes hold, there is also the potential for copyright infringement violations by the users of the machines as they make replicas of designs and concepts critical to other firms.
Management 11/08/2013
Abe Reichental has been president and CEO since 2003, effectively steering the organization through significant changes. Under his watch, the company relocated its headquarters from California to South Carolina and helped protect its valuable aftermarket revenue from third-party companies. Walter Loewenbaum is chairman of the eight-member board of directors, which includes six external members. He has held the position since 1999. Earnings growth and cash on hand are the primary drivers for compensation; we would also like to see the company focus on returns on capital to further support shareholder value creation. Since 2009, the company has increased its returns on invested capital to 18%, a far cry from its low of negative 26% in 2006 following the restructuring and relocation of the company. The improving financial position and management moves support our Standard stewardship rating for the firm.
Overview
Profile:
3D Systems manufactures 3-D printers and related aftermarket materials. The company is one of the largest manufacturers of equipment in the market and has products aimed at all levels of consumers, from hobbyists to high-end industrial printers. The company also has an on-demand custom parts manufacturing business.