3D Systems contract ‘not as bullish as it appears,’ says Craig-Hallum

Craig-Hallum says 3D Systems’ (DDD) announced contract award for aligners, which the firm believes is with Align Technology (ALGN), is “not as bullish as it appears.” While the amount, approaching $250M, and timeline, five years, will give 3D solid visibility, the contract will result in significantly lower levels of revenue in out years versus what the company has recognized recently, the analyst tells investors in a research note. Given its belief that it contract is “simply a renewal (at a lower level) and not anything incremental,” Hallum does not expect positive earnings revisions as a result of the news. Based on 3D’s preliminary Q1 results and “still challenged end markets,” the firm expects its fiscal 2024 estimates could be too high. It keeps a Hold rating on 3D Systems with a $4 price target. The stock in midday trading is up 23% to $4.26.