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3D Systems Q4 Report Comes During Painful Time For 3D Printers

Working through a restructuring in a tough market, 3D printer maker 3D Systems ( DDD ) is scheduled to report fourth-quarter earnings before the market open Monday. The report follows that of rival Stratasys ( SSYS ), which on March 3 reported a Q4 loss and big drop in revenue that nevertheless beat expectations on the top and bottom lines. Earnings are also coming from 3D printer maker ExOne ( XONE ), before the market open Wednesday. 3D printer companies, which generated widespread excitement a few years ago on the idea that their products represented an innovative leap in manufacturing processes, have been hammered. Shares of Stratasys and 3D Systems, the two industry leaders, have been crushed since mid-2014, as both have posted disappointing quarterly earnings reports going back more than a year. But 3D printer stocks have rebounded in the past month-plus. 3D Systems stock closed Friday at 11.55, up more than 1%, after hitting its all-time low of 6 on Jan. 20. Stratasys closed at 24.19, up 3%. It hit an all-time low of 14.88 on Jan. 26. ExOne rose 5% to close at 10.93. It hit an all-time low of 6.61 on Jan. 20. 3D Systems expects to report Q4 revenue of about $183 million, down 2% year over year. The consensus analyst estimate is $166.4 million among analysts polled by Thomson Reuters. The consensus on earnings per share minus items is three cents, down 86%. It would be the fourth quarter in a row of EPS deceleration. “Industry conditions remain challenging, and demand may be uneven in the coming periods,” Andy Johnson, the company’s interim CEO and chief legal officer, said in a company statement on Feb. 25. “However, we are confident about the long-term opportunities for our technology and solutions.” 3D Systems was originally scheduled to report Q4 earnings on Feb. 29. The company delayed its report to give it more time to complete work on non-cash goodwill and intangible-asset impairment charges. These accounting changes aim to reflect a more realistic balance between the worth of company assets and their financial value. They also relate to the value placed on intangibles such as brand name recognition and reputation. 3D Systems expects these charges to be $510 million to $570 million but does not expect them to impact cash flow. 3D Systems had a dismal third quarter , as revenue fell 9%, its first year-over-year decline in more than 18 quarters. 3D Systems and Stratasys have made forays into the consumer market without much success. In December, 3D Systems announced that it would end production of its $999 Cubify printer, three years after entering the consumer field. Stratasys entered that market in July 2013 with its $403 million acquisition of MakerBot. It began reorganizing the unit in July and also lowered the book value of MakerBot.

Macom Leapfrogs Apple-Supplying Chip Rivals With Lasers, Radar

FAA and NOAA demand for weather applications will drive approximately $500 million in additional annual revenue over the upcoming five years for IBD Leaderboard stock  Macom Technology Solutions ( MTSI ), a Needham analyst said Friday following the chipmaker’s “upbeat” analyst day. Macom stock rose 5.8% on the stock market today , to 43.79 — nearing its all-time high of 44.15, achieved Monday — and extended 5.7% from a 41.42 buy point. IBD’s 41-company Electronics-Semiconductor Manufacturing industry group jumped 2.3% Friday, spurred by Macom. Shares of chip rivals Analog Devices ( ADI ),  Qorvo ( QRVO ) and Skyworks Solutions ( SWKS ) — all Apple ( AAPL ) suppliers — rose 1.2%, 2.2% and 3.5%, respectively. Needham analyst N. Quinn Bolton reiterated his buy rating and 46 price target on Macom stock. Barclays boosted its price target on Macom stock to 44 from 41 and maintained an overweight rating. Macom Ogles Vast Growth Optical, gallium nitride (GaN) and active antenna radar could each double Macom’s approximately $500 million revenue over the next three to five years, “potentially driving up to $2 billion of annual revenue by 2020,” Bolton wrote in a research report. “While management was clear the team may not bat 1,000 and that timing of specific product ramps was difficult to accurately forecast, management has clearly set an objective to become a much larger company,” he wrote. Macom’s $2.3 billion market cap puts it distantly behind industry leader Intel ( INTC ) and Intel’s $150 billion market cap. Unlike its Apple-supplying rivals, Macom’s chips aren’t focused on consumer products but instead are used in commercial and industrial applications like cellphone base stations, military radar and lasers. Macom also is developing GaN-on-silicon chips, squaring off with privately held Transform, Infineon Technologies and Efficient Power Conversion (EPC). GaN transistors can turn on and off faster than silicon, can withstand a higher voltage and are markedly smaller. Could Gallium Nitride Take On Silicon? Last year, EPC figured out how to make them cheaper, too, EPC CEO Alex Lidow told IBD in February. Lidow used to head up International Rectifier, which Infineon acquired in 2014. Companies like EPC aim to use GaN in electronic components such as transistors. EPC grows a thin layer of gallium nitride on silicon wafers and, like Macom, it uses the chips in cellphone base stations. “GaN is being used in base stations, going up in Google balloons and Facebook ( FB ) drones,” Lidow said. Other applications include a swallowable colonoscopy pill, autonomous cars ( Alphabet ( GOOGL ) and Tesla Motors ( TSLA ) are among the competitors) and wireless charging. Lidow estimates a $370 billion total addressable market — $30 billion in power, $40 billion in analog and $300 billion in digital. Macom is trying to grab some of it. The company has been in talks with smartphone makers Huawei, Nokia ( NOK ) and Ericsson ( ERIC ) for over a year and just recently completed customer validation, Bolton wrote. “If the commercial contract negotiations go well, management believes the company could generate first production revenue for GaN-on-Si (GaN-on-silicon power amplifiers) by year-end 2016,” he wrote. Macom estimates that it can scoop 40%-60% of the base station power amplifier market over the next three to five years. RELATED: 5 Chip Stocks To Watch, Moving Up, With Apple’s Big Event March 21

Gold Is Still King Of Financial Assets In 2016; Mining Stocks Prove It

Gold and silver mining stocks still reign over the stock market, even though they weren’t the biggest gainers of the week. Gold stocks trailed discount retail, steel, coal and U.S. oil exploration peers in terms of weekly gains. But IBD’s Mining-Gold/Silver industry group is now up 38% since Jan. 1, crushing the Nasdaq composite and the S&P 500. It remains No. 1 among 197 IBD industry groups and subgroups for six-month relative price performance. Traders who seek a fortune in gold stocks should carefully interpret IBD ratings and their charts. Six firms in the 64-member group have a 90 Composite Rating or higher, but only Toronto-based Seabridge Gold ( SA ) trades at least 10 a share. One cannot expect IBD ratings to be rosy in an industry that is fighting for a comeback. So it makes sense to spend time studying the charts and production characteristics of the major players with high trading liquidity and stable fundamentals. They include  Goldcorp ( GG ) ($13.6 billion market cap, $4.4 billion in trailing 12-month sales),  Newmont Mining ( NEM ) ($14.1 billion, $7.7 billion) and Barrick Gold ( ABX ) ($16.3 billion, $9 billion). Goldcorp produced 3.46 million ounces of gold in 2015. It also closed the year with 40.7 million ounces of gold mineral reserves, set at $1,100 per ounce. Meanwhile, the company boosted the grade of those reserves by 13% to 1.06 grams per ton of rock. Wall Street currently sees Goldcorp’s earnings rebounding 86% to 13 cents a share this year and up 154% to 33 cents. That growth trajectory is nice, but keep in mind that those profits are a far cry from 2011, when Goldcorp earned $2.21 a share and gold prices lurched toward $1,900. Newmont’s earnings are seen falling 31% to 68 cents a share in 2016, then rising 65% to $1.12. The Greenwood Village, Colo., firm suffered falling revenue in four of the past five years. In Q4 2015, revenue sank 10% to $1.82 billion. Barrick’s sales have fallen vs. year-ago levels for 12 quarters in a row. But the Street sees EPS jumping 23% to 37 cents a share this year and 24% to 46 cents in 2017. The price of gold has a huge impact on all miners. On the Comex, near-term gold futures contracts traded Friday near $1,260 per ounce, up 20% from a Dec. 17 closing low of $1,049.60. Phil Orlando, chief equities strategist at Federated Investors ($361 billion under management), notes that a modest pickup in U.S. inflation, ongoing violence in the Middle East, and steady consumer demand in big nations such as China and India are all contributing to the current rally in gold. “I would be surprised if gold demand in India did not increase in 2015 from the prior year,” Orlando told IBD. Miners need to keep costs under control, or face operating losses even amid shiny prices lately. Goldcorp noted “all-in sustaining costs” in Q4 2015 of $977/oz., including inventory impairments as determined by accounting rules. Excluding such impairments, all-in costs fall to $867/oz. Seabridge said March 8 an independent estimate raised the amount of inferred extractable gold at its Deep Kerr Deposit in northwest British Columbia, Canada, to 11.3 million ounces.