May 9, 2014 / 11:51 AM / 4 years ago

UPDATE 2-Stratasys sticks to forecast, disappointed investors sell

* 1st-qtr adjusted profit $0.40/shr, matching estimates

* Adjusted revenue $151.2 mln vs est $143.3 mln

* Company reiterates full-year profit and revenue outlook

* Shares fall as much as 9.6 pct (Adds analyst comment, details; updates shares)

By Soham Chatterjee

May 9 (Reuters) - 3D printer maker Stratasys Ltd reported an adjusted quarterly profit that matched the average market estimate and stuck to its full-year forecast on Friday, disappointing investors who had expected better on both counts.

Stratasys shares fell as much as 9.6 percent in early trading as investors also overlooked a better-than-expected rise in adjusted revenue, helped in part by the acquisition of consumer 3D printer maker MakerBot last year.

The company, which has traditionally focused on large industrial printers that sell for $15,000-$750,000, bought MakerBot in a $494 million deal that closed in August.

Adjusted margins rose to 60.9 percent from 59 percent a year earlier. However, Stratasys said the operating margin expansion in its core business would likely be offset this year by the full-year impact from MakerBot, which is investing heavily on development and product launches.

Stratasys said it expected operating expenses to increase “materially” this year due to investment in sales and marketing.

Capital expenditure was forecast at $50-$70 million.

Operating expenses rose 42 percent in the quarter.

Earnings were also influenced by a fall in income tax to $820,000 from $3.1 million, which BB&T Capital Markets analyst Holden Lewis said was worth about 5 cents per share.

“I would expect that as you would go into Q2 and Q3 as the revenue growth remains strong and the leverage improves, I think that the reaction to the stock would be far improved from what we are seeing today,” Lewis told Reuters, calling Friday’s drop “fairly shortsighted.”

Janney Capital Markets analyst John Baliotti said selling was likely due to expectations among some investors that earnings per share would be higher and that the company would raise its forecast.

Stratasys reiterated its 2014 forecast of adjusted earnings of $2.15-$2.25 per share on revenue of $660-$680 million. Analysts on average were expecting $2.21 per share on revenue of $674.8 million, according to Thomson Reuters I/B/E/S.

Stratasys said it expected organic sales, excluding MakerBot sales, to grow at least 25 percent from 2013.

Net income attributable to Stratasys was $4.1 million, or 8 cents per share in the quarter, compared with a loss of $15.5 million, or 40 cents per share, a year earlier.

Excluding items, the company earned 40 cents per share, in line with the average analyst estimate, according to Thomson Reuters I/B/E/S. Adjusted revenue of $151.2 million beat the average estimate of $143.3 million.

Stratasys’s share count rose 33 percent from a year earlier, in part due to the issue of shares for the MakerBot acquisition.

Stratasys shares were trading at $88.73, down from Thursday’s close of $94.32.

Up to Thursday’s close, the stock had lost about 30 percent of its value this year in a general sell-off of 3D stocks amid growing concern that the sector was over-valued.

Shares of Stratasys rival 3D Systems Corp, which has lost about half their value this year, were down 1.8 percent. (Reporting by Soham Chatterjee and Sruthi Ramakrishnan in Bangalore; Editing by Don Sebastian and Ted Kerr)

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