3-D printing continues to mature and expand. And now, investors have a larger company to play the trend.
Desktop Metals’ (ticker: DM) goal is to bring the technology to mass-production markets. It popped up on investors’ radars this past summer after announcing plans to merge with the special-purpose acquisition company Trine Acquisition. That deal closed in December. Desktop quickly moved to put to use some of the cash raised in the SPAC merger, announcing a $300 million cash-and-stock deal to buy EnvisionTEC in January.
Envision uses light to cure photopolymers—resin that hardens in response to certain wavelengths of light. Desktop, essentially, binds metal powders together and then bakes the parts in furnaces. The technology is different, but there is a key similarity.
Both companies used their technology to print wide areas all at once. Envision exposes a large layer of a plastic part to light all at once, while Desktop prints an entire layer of a metal part in a single pass. That is a little different from earlier generations of 3-D printing and means higher productivity for Desktop machines.
With the Envision deal “we have locked up the foundational [intellectual property] in area wide printing,” Desktop CEO Ric Fulop told Barron’s.
When Desktop merged with Trine, it projected sales of about $940 million by 2025. Projections like that aren’t available for the combined company, but sales should be much higher now. “This is an additive event on top of previous projections,” said the CEO.
“[3-D printers] are 0.1% of $12 trillion made with conventional manufacturing,” says Fulop. That works out to about $12 billion in 3D-printing sales today, a figure the CEO expects to grow more than tenfold by the end of the decade.
Explosive growth in 3-D printing has been predicted for years. The difference these days, according to Fulop, is that the technology is getting better. More powerful LED lights have greatly improved the photopolymer printing process.
Investors appear to be convinced about 3-D printing’s prospects. Including the move in Trine Acquisition stock before the merger with Desktop closed, shares rose more than 130% from the time of announcement of that deal until the Envision acquisition was disclosed. The stock is up another 35% since the news of the Envision purchase.
Four analysts have picked up coverage of the stock and three rate shares Buy. Although the sample size is small, the figures show that Wall Street likes the stock. The average Buy-rating ratio for stocks in the Dow is about 57%.
The average call on the stock price, however, is only about $27, below where the shares are trading. Analysts will have to update their forecasts now that the deal is closed.
The next point for analysts and investors will be Desktop’s earnings, due to be reported in coming weeks. Revenues are expected to be small at roughly $9 million for the fourth quarter. Analysts project $72 million in sales for 2021. Those projections haven’t changed since Desktop announced its Envision purchase. That is another thing that analysts will have to update.
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