3D Printing Technology Is 'Immature,' UBS Says While Maintaining A Sell Rating On 3D Systems

• Shares of 3D Systems Corporation (NYSE: DDD) surged on Thursday after the company issued a better-than-expected outlook.


• Steven Milunovich of UBS commented in a note that 3D Systems' guidance could "signal a bottom" in a weak demand environment.


• Nevertheless, the analyst maintained a Sell rating and $6 price target.

Shares of 3D Systems surged on Thursday after the company released a better-than-expected outlook. The company's guidance wasn't sufficient to satisfy some of Wall Street's bears, however, as Steven Milunovich maintained a Sell rating and $6 price target on 3D Systems stock.

According to Milunovich, 3D Systems' better-than-expected revenue forecast could be an "early sign of a bottom in printing demand." The analyst added that the company's outlook "provides comfort" that management is focusing on the right growth opportunities and that customers' investment cycles "may have stabilized."

Related Link: Watch 3D Printing Stocks Following Better-Than-Expected Outlook From 3D Systems

However, the analyst stated that he needs to see several quarters of "stabilizing demand" to be "confident" in the future of 3D printing.

"We believe 3D printing has the potential to be disruptive in the long term, but the current technology is immature," Milunovich argued. "Improvements are needed in printer reliability, materials, distribution, and user understanding before the industry will become truly disruptive."

Finally, Milunovich stated that the entrance of a "large" player, such as HP Inc (NYSE: HPQ), may be "necessary to take the industry to the next level."

Shares of 3D Systems were trading lower by more than 1 percent Friday afternoon.

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