Headquartered in Belgium, Materialise NV (MTLS) is one of the largest independent 3D printing companies in the world. With more than three decades of experience in the industry, MTLS has delivered impressive financials periodically, commanding a leading position in the global 3D printing segment. While the pandemic severely affected MTLS’ business operations over the past year, it has been recuperating smoothly over the last two quarters.
Following a mass coronavirus vaccination drive, economic recovery is expected to be the key pursuit of the world’s biggest countries this year. This should bode well for the 3D printing industry, which has applications in virtually all sectors. Ease of accessibility and relatively lower costs should bolster the 3D printing market in the coming years, which is estimated to be valued at $8.50 billion by 2025.
As one of the biggest companies operating in this sector, MTLS is poised to grow in tandem with the booming industry, making it an ideal stock to buy and hold. The company maintained its growth trajectory last year through strategic collaborations and a focus on research and development, which allowed the stock to gain close to 200% in 2020. This, coupled with several other factors, has allowed MTLS to earn a “Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates MTLS:
Trade Grade: A
MTLS is currently trading above its 50-day and 200-day moving averages of $50.60 and $38.31, respectively, indicating a golden-cross uptrend. The stock has gained 54% over the past month, indicating solid short-term bullishness.
MTLS’ revenue from the Medical segment has risen 10.8% year-over-year to €17.16 million in the third quarter ended September 30, 2020. This can be attributed to a 3.1% rise in medical software revenues and a 14.5% increase in medical devices and services revenues. Moreover, the company’s recurring revenue from materialized software rose 15.9% year-over-year.
On November 10, MTLS received CE Marking Certification for majority of its orthopedic and CMF solutions. The approval allows MTLS’ products to meet the European Medical Devices Directive’s requirements and thereby can be used in healthcare centers across the continent. MTLS should be able to expand its operations across the European region, boosting its revenue and earnings significantly.
Also in November, MTLS partnered with Desktop Metal Binder Jetting Systems. Under the arrangement, MTLS will build processor support to scale the 3D printing operations of its partner company. The agreement also allows MTLS to leverage its industry knowledge to strengthen its foothold in the 3D printing industry.
Buy & Hold Grade: C
In terms of proximity to 52-week high, which is a key factor that our Buy & Hold Grade considers, MTLS’ positioning is not favorable. It is currently trading 19.8% below its 52-week high of $79.94, which it hit on January 8.
MTLS has gained 360.9% over the past three years, owing to impressive growth in its financials. The company’s revenues have increased at a CAGR of 10.8% over the past three years, while EBITDA has risen at a CAGR of 7.7% over the same period. However, the company’s earnings have not grown simultaneously. In fact, MTLS’ EPS declined 529.5% year-over-year. Earnings before income and taxes (EBIT) have declined at a CAGR of 54.1% over the past three years.
While the 3D printing industry has been one of the most innovative segments in the technology sector, with the capacity to transform the industrial sector, given the inherent requirements and challenges, the industry has not garnered sufficient momentum, as reflected in MTLS’ slow growth.
Peer Grade: B
MTLS is currently ranked #3 of 6 stocks in the Technology – 3D Printing industry. Other popular stocks in this space are Stratasys, Ltd. (SSYS), Proto Labs, Inc. (PRLB) and 3D Systems Corporation (DDD).
SSYS, PRLB and DDD gained 43.9%, 81.7%, and 176.2%, respectively, over the past year. This compares to MTLS’ 237.1% returns over the same period.
Industry Rank: C
The Technology – 3D Printing industry is ranked #101 of 123 industries in the StockNews.com universe. Companies operating in this sector focus on delivering printing services for design-to-manufacturing solutions across the world.
This industry has the potential to redefine major industries, such as aerospace, automotive and medical sectors to name a few. However, the technological complexities of this industry have slowed its potential growth rate. Because major economies around the world are currently focused on mass vaccine deployment and the revival of industrial operations to tackle the ongoing recession, the prospects for the 3D printing industry are likely to remain under-fulfilled in the near future.
Overall POWR Rating: B (Buy)
MTLS is rated “Buy’ due to solid short-term bullishness, impressive financial performance, and growth momentum, as determined by the four components of overall POWR Rating.
The 3D printing industry is poised to accelerate over the coming years, as multiple industries switch to cost-effective and self-reliant production methods. This should allow MTLS to hit record highs soon, allowing shareholders to enjoy healthy returns on their investment.
Analysts are bullish regarding MTLS, and they expect the company’s earnings and revenue to grow substantially in the coming months. MTLS’ EPS is expected to rise 140% in the current quarter (ending March 31, 2021) and 154.5% in fiscal 2021. The company’s revenue is expected to increase 16.5% in the ongoing quarter and 11.8% in the current year.
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MTLS shares rose $0.01 (+0.02%) in after-hours trading Tuesday. Year-to-date, MTLS has gained 20.44%, versus a 1.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...
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