Shares in Stratasys Ltd., the fast-growing maker of 3-D printers, fell sharply Tuesday after the company said its profit wouldn't keep up with sales increases his year.
The stock plunge, which was more than 11 percent for part of the day, was the biggest in more than a year for Eden Prairie-based Stratasys.
Before the market opened, the company issued a statement that reset its financial outlook for 2014, saying sales would be higher than analysts and investors were expecting but profits would be lower. The disconnect in the growth rates, with sales expected to rise 40 percent while profits grow just 22 percent, unnerved the company's investor base, said Bobby Burleson, an analyst at Canaccord Genuity in New York.
"Some investors just don't like to see earnings growth basically staying where it is while revenue growth is strong," Burleson said.
Shares in Stratasys, which has a second headquarters in Rehovot, Israel, closed down $10.63, or 8.2 percent, at $119.37 per share. In after-hours trading, shares were indicating down another 2.8 percent after another 3-D replication firm, called ExOne, cut its revenue outlook for the just-ended 2013 reporting year.
Stratasys executives appear to be trading 2014 profits for longer term growth by planning to spend heavily on marketing and product development.
"With that type of growth, they should plow money back into the company to capitalize on demand," Burleson said.
He said the company's profit also is weighed down by last year's purchase of MakerBot, a New York-based maker of consumer and small-business 3-D printers that yield smaller margins than the industrial machines it makes.
MakerBot attracted considerable attention at last week's Consumer Electronics Show with three new products that included the lowest-priced 3-D printer for consumers yet, at $1,375.
Analysts said the decline for shares in Stratasys and other 3-D printer makers was a sign that investors were taking a beat following the hype before and during CES. Stratasys shares hit an all-time high of $138.10 on Jan. 3 and, even with Tuesday's drop, remain 43 percent higher than they were a year ago.
It's been a time of mostly favorable publicity for Stratasys, whose 3-D printing technology allows businesses and consumers to rapidly create product prototypes or manufacture small quantities of finished products. The technology, which has been used to make artificial teeth, car parts, jewelry, industrial prototypes and even guns, converts computerized instructions into a "printed" physical product by spraying liquid plastic that hardens.
"The marketplace for 3-D printing and additive manufacturing solutions continues to develop very rapidly," Stratasys CEO David Reis said in a statement. "In addition to actively evaluating new acquisitions, we will continue to invest aggressively in sales, marketing and research and development initiatives in 2014 to better capitalize on these opportunities and drive future growth."
Stratasys' forecast adjusted profit to $2.15 to $2.25 per share for 2014. Analysts had forecast $2.33 per share. It said 2014 revenue would be $660 million to $680 million, above analysts' forecast of $656.8 million.
The company said its profit will be weighted toward the second half of the year "driven by the projected timing of operating expenses, as well as the projected timing and success of new product introductions and their corresponding ramp in sales."