HP 3D Printers A Disruptor, Not A Slam On 3D Systems, Stratasys
The entry of HP ( HPQ ) into the 3D printer market is a disruptive force against 3D Systems ( DDD ) and Stratasys ( SSYS ), but it’s not an overwhelming slam, as the two market leaders have time to react, say analysts. HP’s entry is a “negative” for 3D Systems and Stratasys, but it’s “been expected and the real competitive impact could take years to develop,” wrote Pacific Crest Securities analyst Weston Twigg in a research note late Tuesday. The long-awaited entry of HP into the 3D printer market began Tuesday, with partners that include Nike ( NKE ), Autodesk ( ADSK ), ProtoLabs ( PRLB ) and Materialise ( MTLS ). HP said the printers are 10 times faster and half the cost of current 3D printing systems. HP is offering two 3D printers, one for prototyping and the other for prototyping and short-run manufacturing needs. HP has vast resources and a strong desire to turn 3D printing into a growth business, Twigg wrote. “The technology could be disruptive, and customers have shown a high desire to partner with HP on the development of the printer,” he said. The HP announcement is a “modest positive” for Materialise, a 3D printer maker that is partnering with HP on software and other areas, Twigg said. It’s also a modest positive for ProtoLabs, which focuses on the commercial market and offers industrial 3D printing as a service. Though not a direct competitor, Proto Labs is a close peer to 3D Systems and Stratasys and can quickly adopt HP printers if it makes economic sense, as Proto Labs is building out its additive manufacturing service bureaus. Sales of 3D printers totaled $5 billion last year, according to HP. It expects to ship and recognize 3D printing revenue by the Oct. 31 end of its fiscal 2016, and ramp up the business in fiscal 2017. But HP does not expect 3D printing revenue to make a material revenue contribution in either year, wrote RBC Capital Markets analyst Amit Daryanani in a research note. HP’s new lineup poses a threat to 3D Systems and Stratasys in price and speed, but the threat is not overwhelming, said Piper Jaffray analyst Troy Jensen. “We do believe the aggressive pricing HP is promoting could cause pipelines to shrink over the next couple quarters as customers review HP’s printing capabilities,” Jensen wrote in a report. But select printers from 3D Systems and Stratasys “are better in certain applications,” he said. 3D printing technology is being increasingly embraced by corporations, governments and universities. The market for 3D printers, including supplies, will grow 33% to $7.3 billion and will approach $10 billion in 2017, according to Wohlers Associates, which provides technical, market and strategic analysis on the 3D printer market. HP stock fell a fraction on Tuesday but was up a fraction in midday trading in the stock market today , near 11.50. HP stock has been below its 50-day line most of this month. 3D Systems stock, up nearly 1% Tuesday, was down nearly 1.5% midday Wednesday. Stratasys stock, up nearly 2% on Tuesday, was down nearly 2% midday Wednesday.