Investing in Stratasys Ltd (NASDAQ:SSYS)

Stratasys (NASDAQ: SSYS) is an American-Israeli 3D printing company with over three decades of experience in software and hardware development. With many big-name customers in the aerospace, automotive and health sectors, Stratasys has been able to maintain a reputation for being innovative and adaptive throughout the years. By bringing to market 3D printers compatible with several different technologies, the company has been able to diversify its user base and has laid out a solid roadmap for future growth.

What is Stratasys Ltd (SSYS)?

Stratasys is best known for patenting the fused deposition modelling (FDM) method of 3D printing. Through FDM, a large spool of filament is fed through the printer and adds layer upon layer of material onto the object. FDM is the most commonly used type of technology installed on consumer-level 3D printers and usually the first thing people traditionally think of when referring to 3D printing. The benefits of this technique include low costs as well as quick turnaround times, which are both important factors for manufacturers when picking which 3D printing technology to work with.

The FDM technology was developed by Stratasys co-founder Scott Crump in 1988. A year later, Crump patented the technology and established Stratasys. The company rapidly expanded over the following decades, and at one point in 2007, 44% of all printers worldwide used FDM technology. After years of expansion, the company merged with Israeli 3D printer manufacturer Objet in 2012. Continuing to operate under the name Stratasys, the company became the largest in the industry by market cap and benefited from a broader product line and geographic footprint as well as additional funding that was put into research and development. After three decades in existence, the company now has offices in over 13 countries and 2,100 employees and provides services to clients in a variety of industries.

While FDM was developed by Stratasys and used on the majority of their printers, both PolyJet and Stereolithography technologies have also been adopted by the company. Depending on user needs, Stratasys offers four different lines of printers that can fulfill a variety of consumer and enterprise needs. From desktop hobbyists to rapid-prototyping to medical use printers, the company has been able to expand its offerings to meet a variety of needs. The companies printers are heavily relied upon by customers such as Google and Audi, and have won several awards over the years.

Why does Stratasys Ltd (SSYS) Matter?

One of the company's largest strengths is the range of product and service offerings. Among their offerings include direct manufacturing, consulting for design, software offerings, and the sale of printers. Through these service and product lines, customers from a variety of different sectors can be provided with custom-tailored solutions to meet their manufacturing needs. It is for this reason that the company has been able to establish long-lasting relationships with large organizations such as Honda, Airbus, Lockheed Martin, and Audi.

Another benefit of this large line of product and service offerings is the ability to pivot and adapt in rapidly changing times. For example, during the COVID-19 pandemic, GM worked with the United States Department of Health and Human Services to deliver ventilators for patients in critical care. To do this, GM needed to quickly change its manufacturing line and adopt in a way that allowed rapid production of a new product. To create the tools needed to produce these ventilators, GM used Stratasys products and software to reverse engineer ventilators and within a day, was able to begin production. This is just one example of how versatile the existing technology owned by the company is, and demonstrates one of the main reasons why customers are choosing to purchase products in the Stratasys ecosystem.

Stratasys Ltd (SSYS) Prospects?

Stratasys is lead by an executive team that has proven that they have the ability to operate with agility and keep up to date on changing trends. For example, Stratasys announced the acquisition of 3D printing startup company Origin in 2020. Through this acquisition, Stratasys gained access to Origin’s proprietary Programmable PhotoPolymerization (P3) technology. This technology uses a resin-based printing method as opposed to other methods such as FDM that use a filament, which ensures increased accuracy and quality control. With the ability to create high-quality products, P3 technology is extensively used in the dental, medical, defense, and industrial and consumer goods sectors. With research showing that more manufacturers in high-value markets will be needing this type of technology in the coming years, Stratasys made this investment with hopes of future payoffs. In total, the acquisition of this technology is estimated to add up to $200 million in revenue over 5 years.

In total, Stratasys has acquired 13 companies over its three decades of operation. Acquisitions, such as the one of desktop 3D printer industry leader MakerBot in 2013, have already shown extremely promising upside and delivered profits over the past few years. The ability of the company to spot promising technologies early and bring them into the Stratasys ecosystem is likely to have payoffs for years to come.

Where to Buy Stratasys Ltd (SSYS) Stocks?

A broker that we recommend is Firstrade.

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Summary

Stratasys is a very diverse company that has kept up for decades with changes in the 3D printing sector. Through both research and development and strategic acquisitions, the company has continually been able to meet the needs of an ever-changing user marketplace. These strategic moves have expanded the addressable market for their 3D printers to not only industrial users but also personal users as well. With award-winning hardware and an excellent reputation for innovation, the current customer base is likely to steadily increase over the next several years.