Needham analyst James Ricchiuti has maintained their neutral stance on PRLB stock, giving a Hold rating on February 4.
James Ricchiuti has given his Hold rating due to a combination of factors concerning Proto Labs’ recent financial performance and strategic investments. The company ended 2024 with a better-than-expected revenue performance for the fourth quarter, and the earnings per share (EPS) exceeded forecasts, partly due to a lower tax rate. Despite this positive outcome, overall business activity remains subdued, and the guidance for first-quarter revenue aligns with current expectations.
Proto Labs is making strategic investments aimed at boosting growth in the production part of its business, which currently contributes to about a third of its revenue. These investments are anticipated to result in higher operational expenses and a decrease in EPS throughout 2025. While these initiatives are considered crucial for long-term growth, it is premature to quantify the potential benefits on the top line, which contributes to a more cautious outlook. Consequently, the Hold rating reflects a balanced view of the near-term financial impact of these investments against the potential for future growth.