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Printing a Moat, One Layer at a Time

3D Systems and Stratasys add a new dimension to manufacturing.

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We think the additive manufacturing industry is ripe for further growth as the cost of hardware declines and manufacturing and design companies look to be more efficient with product-development spending. Though both stocks are ahead of our fair value estimates, we think  3D Systems (DDD) still offers significant earnings growth potential as the firm benefits from secular growth trends and improving margins.  Stratasys' (SSYS) upcoming merger with Objet should create a dominant force in the rapid prototyping segment, which we think is the most compelling growth market for 3D Systems and Stratasys.

What Is 3D Printing and Why Does It Matter?
Three-dimensional printing, also called additive manufacturing, is the process of building objects from a 3D computer design by layering thin strips of material on top of each other. Typically the material, be it plastic, composite, or metal, is extruded wet and dries quickly before the next layer is applied, although some printers use ultraviolet curing between printer head passes. Even though the technology and concept have received a lot of buzz, the foundational principles behind additive manufacturing have been around for decades. The industry has risen to prominence largely because lower unit costs have created new markets for the technology, particularly in the professional and hobbyist markets.

Daniel Holland does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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