Stratasys (SSYS) Shares Soar 14% on Revised Takeover Proposal
Stratasys SSYS confirmed that the Israel-based 3D printed electronics systems and additive manufacturing company, Nano Dimensions, has offered a revised takeover proposal in an all-cash deal. Shares of the 3D printing solution provider gained approximately 14% following the announcement on Wednesday.
The company revealed that Nano Dimension has made a revised unsolicited, non-binding indicative proposal to acquire Stratasys for $19.55 per share in cash. The latest offer reflects an acquisition premium of about 21.7% to the target company’s yesterday’s closing price of $16.06.
On Mar 22, the company’s board unanimously rejected Nano’s unsolicited non-binding indicative proposal to acquire Stratasys for $18.00 per share in cash. After careful evaluation, the SSYS Board stated that the proposal substantially undervalued Stratasys and was not in the best interests of Stratasys and its shareholders.
Earlier on Mar 9, Reuters had reported about the Israel-based company’s takeover bid value of around $1.1 billion. The global news and financial data provider revealed that Nano Dimension, the largest shareholder of Stratasys, owns approximately 14.5% of outstanding shares of the company at present. In July 2022, Nano Dimension had acquired 12.12% of SSYS’ outstanding shares and through the latest deal, it intends to buy remaining stake of the Eden Prairie, MN-headquartered firm.
Stratasys, Ltd. Price and Consensus
Stratasys, Ltd. price-consensus-chart | Stratasys, Ltd. Quote
The buyout would strengthen Nano Dimension’s 3D printing business creating a market leader with unparalleled portfolio of materials, software and deep learning with a go-to-market strength in the form of sales channels. Moreover, the acquisition would give Nano access to Stratasys’ wide range of premium polymer-based 3D printing systems, material and consumables, fused deposition modeling and PolyJet AM machines portfolio, which would help it fortify its manufacturing capabilities and overall productivity.
The acquisition would also boost Nano Dimension’s research and development capabilities, enhance opportunities of market penetration, new customer engagement, cross-selling and lead synergies saving costs for the company.
What Makes Stratasys a Takeover Target?
Stratasys has been scaling newer heights across all its business segments. It has been benefiting from an increase in demand for 3D-printed materials and its focus on product launches and strategic partnership agreements or acquisitions.
Over the past few quarters, the company has inked strategic partnerships with the likes of Schneider Electric, The Boeing Co., Ford Motor Co., Siemens, Boom Supersonic and United Launch Alliance to fuel its growth momentum. Such collaborations help introduce advanced 3D printing technologies to the aerospace and automotive industries while expanding Stratasys’ geographic reach and driving its market penetration. These partnerships spell opportunities for the company’s 3D systems business while increasing its installed base.
Besides, the company has launched several innovative products that position it well over the long term. Stratasys’ machines facilitate prototyping within a few hours, which reduces development time and upfront costs. The company’s spool-based system compares favorably with UV polymer systems. Its RedEye RPM is the world's largest RP and part-building service. RedEye RPM is an online extension of the company’s BuildFDM service. This product has grown rapidly over the past several years and has offered good business for the company.
In February 2022, Stratasys launched a first-ever monolithic, full-color 3D printed permanent dentures solution, TrueDent, specifically designed for the fabrication of dental appliances, including removable dentures and temporaries. This transformative solution for the dental industry, not only simplifies the denture manufacturing process, but also lowers the costs, allowing for dentures and temporaries to be produced much faster, achieving incredible aesthetics.
In 2021, Stratasys enhanced its dental solution portfolio with the launch of Origin One Dental 3D printer, which provides comprehensive additive manufacturing solutions to the dental industry. In the same year, it launched a new cybersecurity solution for additive manufacturing named ProtectAM and unveiled J5 MediJet, a compact medical 3D printer that integrates multiple applications into one system, enabling the creation of intricate 3D anatomical models.
Attractive Valuations Make SSYS Acquisition Target
Technology is among the most-battered sectors amid a broader market sell-off in 2022. However, this sell-off in the broader equity market has led to a massive correction in several technology companies’ stock prices. These companies were considered to be grossly overvalued at the sector’s peak in 2021. With this correction, several tech stocks are currently trading way below its 52-week high and at an attractive valuation as well, despite strong fundamentals.
In our opinion, SSYS is among the most beaten-down stocks in the technology space. At yesterday’s closing price, shares of SSYS are trading 39.4% lower than its 52-week high of $26.48 attained on Mar 31, 2022.
Moreover, the stock currently trades at a forward 12-month price-to-sales multiple of 1.62, significantly lower than the five-year high of 5.51 as well as the Zacks Computer-Peripheral Equipment industry’s average of 5.73.
The strength of Stratasys’ fundamentals and solid prospects along with attractive valuations is likely to have made the Israel-based additive manufacturing firm consider the acquisition.
Zacks Rank & Other Key Picks
Stratasys currently carries a Zacks Rank #2 (Buy). Shares of SSYS have plunged 38.8% in the past year.
Some other top-ranked stocks from the broader Computer and Technology sector are Airbnb ABNB, Baidu BIDU and Fabrinet FN. While Baidu sports a Zacks Rank #1 (Strong Buy), Airbnb and Fabrinet carry a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Baidu’s first-quarter 2023 earnings has been revised 17 cents northward to $2.60 per share over the past 30 days. For 2023, earnings estimates have fell by 0.8% to $11.53 per share over the past 30 days.
BIDU’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 45.5%. Shares of the company have increased 9.8% in the past year.
The Zacks Consensus Estimate for Fabrinet's third-quarter fiscal 2023 earnings has been revised 7 cents upward to $1.90 per share over the past 60 days. For fiscal 2023, earnings estimates have moved north by 23 cents to $7.71 in the past 60 days.
FN’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 5.1%. Shares of the company have jumped 7.9% in the past year.
The Zacks Consensus Estimate for Airbnb’s first-quarter 2023 earnings has been revised northward from a loss of a penny to 14 cents per share over the past 60 days. For 2023, earnings estimates have moved up by 58 cents to $3.38 in the past 60 days.
ABNB's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 57.2%. Shares of the company have declined 31.6% in the past year.
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