Stratasys Ltd. (SSYS) reported disappointing second-quarter financial results, missing analysts’ expectations for revenue and slashing its full-year guidance. The company’s revenue for the second quarter of fiscal year 2024 reached $138.04 million, falling short of the anticipated $146.34 million. While the adjusted earnings per share (EPS) loss of 4 cents surpassed the expected loss of 5 cents, the revenue shortfall raised concerns.
In response to these challenges, Stratasys announced a plan to reduce its workforce by 15% by the end of 2024. This cost-cutting measure is expected to generate annual savings of $40 million starting in the first quarter of 2025. The company also aims to achieve annualized EBITDA margins of 8%.
Reflecting the company’s reduced outlook, Stratasys lowered its FY24 revenue projection to a range of $570 million to $580 million, significantly lower than the previous guidance of $630 million to $645 million. This revised forecast also falls short of the consensus estimate of $631.63 million.
Similarly, the adjusted EPS outlook was downgraded to a range of $0.01 to $0.05, compared to the previous projection of $0.12 to $0.19 and the consensus estimate of $0.15. The company also lowered its adjusted EBITDA outlook to $24 million to $27 million, down from the prior range of $40 million to $45 million, and adjusted operating margins to 0.5% to 1.0%, compared to the previous target of 2.5% to 3.5%.
Despite the negative news, Stratasys anticipates positive cash flow from operating activities. The company also expects third-quarter revenue to be slightly higher than second-quarter revenue, although this projection falls below the consensus estimate of $160.78 million.
Following the earnings announcement, several analysts adjusted their price targets for Stratasys shares. Needham analyst James Ricchiuti maintained a Buy rating but lowered the price target from $12 to $10. Lake Street analyst Troy Jensen also kept a Buy rating but reduced the price target from $15 to $11. Cantor Fitzgerald analyst Troy Jensen maintained an Overweight rating but cut the price target from $23 to $12.
Stratasys shares closed down 9.9% at $6.92 on Thursday after the earnings release. While the company faces challenges, some analysts remain optimistic about its long-term prospects in the 3D printing industry.
