When Stratasys Ltd. (NASDAQ: SSYS) reported third-quarter earnings Wednesday morning, the company’s executives must have anticipated a negative reaction to the news. They probably did not expect the reaction to be as strong as it was.
Stratasys beat the consensus estimate for adjusted earnings per share of $0.57 by one penny and also topped the revenue estimate of $195.5 million, posting sales of $204 million. Everything’s good so far. Then the wheels came off:
[Stratasys] adjusted its financial guidance for fiscal 2014 to account for the recent acquisition of GrabCAD, with the expectation that ongoing development costs, as previously disclosed, are expected to negatively impact the fourth quarter by $0.03 to $0.05 per share. Non-GAAP net income guidance was adjusted to $2.21 – $2.31 per diluted share; versus previous guidance of $2.25 – $2.35 per diluted share.
Analysts were expecting full-year EPS of $2.30 and fourth-quarter EPS of $0.78. If fourth-quarter EPS falls below $0.78, as Stratasys now forecasts, that full-year EPS consensus is out the window.
Stratasys had made few acquisitions over the past few years, the notable exception being MakerBot, which the company acquired last year to give it a presence at the low-end of the market. Competitor 3D Systems Inc. (NYSE: DDD) has followed an aggressive acquisition policy, corralling about 50 smaller companies in the same few years. 3D Systems has been taken sharply to task for its acquisitions, but that really has not slowed the company down much.
Shares of Stratasys are down about 11% over the past 12 months, having recovered a bit more than half their loss in that time. Shares of 3D Systems are down nearly 47% in the same period, and the downturn has been sharpest since the shares peaked in early January.
Stratasys traded down nearly 13% midday Wednesday, at $105.62 in a 52-week range of $85.30 to $138.10.
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