Stratasys (SSYS) Message Board

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Technology Stocks : Stratasys (SSYS)

SSYS 9.450

-4.0%

Nov 6 3:59 PM EST

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To: BoNg-N-BoNg who wrote (47)	10/19/1996 12:53:00 PM
From: Stratajema	of 316

Be Careful. Brookehill Equities was Stratasys' placement agent for their two private equity placements last year. You might want consider this when following/reading their advice. This summer/fall almost all of the outstanding warrants for Stratasys stock were registered, exercised and sold by the warrant holders with the most prominent seller being Nathan Low. While these warrant holders certainly have a right to sell their shares for whatever motivation, it begs the question of why they would choose to sell their stock at $15 to $18 if a $30 share price was just around the corner. Some competitors of Stratasys that I spoke to this past summer remarked that the FDM 1650 may be nearing a saturation point and that Stratasys may have to strongly pursue international sales to keep sales momentum going. In my opinion, international sales will add more to the cost of goods sold so their gross margin will be important to watch. All competitors candidly admitted that Stratasys has an excellent product but the FDM machine has physical limitations on accuracy which is why the machine is mostly sold to engineering groups as opposed to tooling shops where 3D Systems sells many of their machines. In order to keep sales momentum going, Stratasys badly needs to get the Genisys and 8000 machines out the door. And longer term (1 to 2 years out) they need to produce machines that create metal prototypes since this is where now unseen competitors will be entering the prototyping market. Brookehill Equities certainly is a fine firm but in their research report dated July 11, 1995 they placed a 12 month target of $33 on this stock and as you now know, 15 months after that report the stock is now consistently in the $17 to $20 range. In order to meet analyst estimates for the year and therefore justify a higher stock price, Stratasys will need 4th Qtr sales of $14 Million and 4th Qtr earnings of .76c per share, an unlikely target. At this point Stratasys is really competing with itself in their corner of the rapid prototyping market. They're aren't many well positioned rivals in their market. There main marketing task to date has been to convince prospective customers to change the way they create models and that their FDM machine will save them money. The analyst reports I have read have conveniently forgotton to mention that many companies aren't ready to adopt this technology yet and need more convincing. It will be interesting to see if blood will run in the street again this quarter with the stock price of their nearest competitor TDSC. I'd like to buy into that company on a volume sell off in the $9 range. TDSC is an excellent example of how high flying stocks can really hit the ground! Regards, David

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