The tech sector might remain under pressure in the near term due to macroeconomic issues. Therefore, I think 3D Systems Corporation (DDD), Shapeways Holdings, Inc. (SHPW), might be best avoided now, considering their bleak fundamentals.

According to an International Data Corporation (IDC) analysis, global IT spending is expected to slow down in 2023 as increasing interest rates impact company budgets.

Stephen Minton, vice president in IDC’s Data and Analytics research group, said, “Since the fourth quarter of last year, we have seen clear and measurable signs of a moderate pullback in some areas of IT spending.”

According to “The Challenger Report,” the tech business increased layoffs by 649% in 2022, the most since the dot-com bubble more than two decades ago.

With experts believing that a recession is on the horizon, DDD and SHPW might fall further in price.

Let’s delve deeper into the fundamentals of the stocks.

3D Systems Corporation (DDD)

DDD provides 3D printing and digital manufacturing solutions in the Americas, Europe, the Middle East, Africa, Asia Pacific, and internationally.

DDD’s forward EV/Sales of 2.01x is 24.4% higher than the industry average of 1.62x. Its forward EV/EBITDA multiple of 891.49 is significantly higher than the industry average of 10.43.

DDD’s ROTA of negative 8.48% is lower than the industry average of 5.07%. Also, its ROCE of negative 15.49% is lower than the industry average of 13.67%.

DDD’s non-GAAP revenue decreased 12% year-over-year to $132.73 million during the fourth quarter that ended December 31, 2022. Its non-GAAP operating loss came in at $9.91 million, compared to an income of $12.36 million in the previous-year quarter.

Also, its non-GAAP net loss came in at $7.47 million, compared to net income of $11.57 million in the previous-year quarter. Its non-GAAP loss per share came in at $0.06, compared to income per share of $0.09 in the previous-year quarter.

The consensus revenue estimate of $128.02 million for the fiscal first quarter that ended March 2023 represents a 3.7% decrease year-over-year. Its EPS to is expected to decline 21.6% year-over-year to negative $0.07. The stock has lost 13.7% over the past six months to close its last trading session at $9.13.

DDD’s POWR Ratings reflect this poor outlook. The stock has an overall rating of D, equating to a sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

DDD is also graded a D in Sentiment, Quality, and Stability. It is ranked #3 among six stocks in the F-rated Technology – 3D Printing industry. In addition to the POWR Ratings stated above, DDD’s grades for Growth, Value, and Momentum can be seen here.

Shapeways Holdings, Inc. (SHPW)

SHPW facilitates the design, manufacture, and sale of 3D printed products in the United States, Europe, and internationally. It is a leader in the large and fast-growing digital manufacturing industry.

SHPW’s EBIT margin of negative 71.66% is lower than the industry average of 9.64%. Also, its ROCE of negative 26.47% is lower than the industry average of 13.67%.

SHPW’s loss from operations increased 33.3% year-over-year to $7.19 million in the fourth quarter, which ended December 31, 2022. Its net loss increased 193.8% year-over-year to $6.96 million. Also, its net loss per share came in at $0.13, up 225% year-over-year.

Street expects SHPW’s revenue is expected to decline 4%, to $8.10 million for the fiscal second quarter that ended March 2023. Its EPS to decrease 35.3% year-over-year to negative $0.13 in for the same period. Over the past month, the stock has lost 39.7% to close the last trading session at $0.37.

SHPW’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall rating of D, which equates to a Sell in our proprietary rating system.

It is ranked #4 in the same industry. It has an F grade for Quality and a D for Stability. To see additional SHPW’s rating for Value, Sentiment, Momentum, and Growth, click here.

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DDD shares were trading at $9.17 per share on Monday afternoon, up $0.04 (+0.44%). Year-to-date, DDD has gained 23.92%, versus a 8.19% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

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