Head of Equity Strategy
Summary: The 3D printing industry, also called additive manufacturing, has been around since the late 1980s and has experienced many false starts including the most hyped one in the years around 2013 when investors and the industry believed that every household was about to own a 3D printer. The future turned out very different and the industry has finally realised that the future is additive manufacturing creating better components for industrial applications. The recent years of standardization, availability of materials, and lower costs have caused some research firms to predict that the industry is at the cusp of seeing a decade of rapid growth.
3D printing was a hot and exciting topic back in the years 2010 and 2013 with high expectations that 3D printing would turn into a high growth consumer market with households installing their own 3D printers at home. It turned out to be a false start for the industry like so many other times since the 3D technology started to be commercialized in the late 1980s.
The constant issue for the 3D printing has been its complexity from designing the component in specialized software, the high costs and lack of standards. 3D printing is still used but has slowly adopted the word additive manufacturing reflecting that its future lies in manufacturing. The past couple of years have seen increase in standardization, lower costs, more materials available for manufacturing with especially advancements in metals printing causing some research firms to project a $41 billion 3D printing market by 2026.
3D printing is suitable for fast and cheaper prototyping of components, but the industry is not ready for mass scale production yet, but increased standardization will lead to an accelerated cost reductions and more adoption over the coming years, but the growth path could be quite long for additive manufacturing. The chart below shows the chance in 3D printing adoption over the past four years in industrial manufacturing. There are growing signs that the next and more sustainable high-growth stage is starting for additive manufacturing. We see the 3D printing industry as an option for many industrial companies to reduce costs and weight of components which in turn increase energy efficiency. In that light the additive manufacturing industry could be part of the future decarbonization trajectory that we describe in our Q3 Outlook.
3D printing theme basket
Our basket on 3D printing companies is the smallest we have done so far with only 16 companies making the cut. We want our baskets to provide as pure exposure as possible to a theme and thus our theme basket is much narrower than the available 3D printing ETFs in the market. As the table shows, analysts are in general positive on the industry with a median price target being 17% above the current price. The basket has also outperformed the MSCI World since December 2015, although as we all our theme baskets the five-year performance chart does have some survivorship bias and thus should be taken as an indicator for future performance. One of the most hyped 3D printing companies right now is Desktop Metal which IPO’ed in May 2019 and just begun commercialization with revenue expected to hit $103mn in 2021; with a market value of $2.8bn Desktop Metals reflect the renewed risk appetite for this industry.
| Name | Mkt Cap (USD mn.) | Sales growth (%) | EBITDA growth (%) | Diff to PT (%) | 5yr return |
| 3D Systems Corp | 5,009 | -7.6 | NA | -38.4 | 187.1 |
| Desktop Metal Inc | 3,205 | 720.8 | NA | 39.7 | NA |
| Allegheny Technologies Inc | 2,634 | -33.2 | NA | 18.6 | 57.8 |
| Proto Labs Inc | 2,624 | -5.4 | -26.5 | 10.8 | 61.6 |
| Carpenter Technology Corp | 1,883 | -37.5 | NA | 11.0 | 32.6 |
| Stratasys Ltd | 1,806 | -14.9 | NA | -1.9 | 10.3 |
| FARO Technologies Inc | 1,430 | -18.2 | NA | 22.7 | 137.0 |
| Materialise NV | 1,288 | -13.3 | -42.6 | 32.5 | 253.5 |
| SGL Carbon SE | 1,176 | -12.5 | NA | -32.0 | -12.8 |
| ExOne Co/The | 534 | 3.2 | -34.6 | 15.5 | 102.9 |
| SLM Solutions Group AG | 506 | -0.3 | 32.9 | 39.2 | -4.1 |
| Prodways Group SA | 175 | -19.7 | NA | 4.5 | NA |
| Amaero International Ltd | 89 | NA | NA | NA | NA |
| Meatech 3D Ltd | 89 | NA | -4459.2 | NA | NA |
| voxeljet AG | 85 | NA | NA | 73.4 | -44.5 |
| Titomic Ltd | 45 | -81.1 | -45.0 | 505.1 | NA |
| Aggregate / median | 22,579 | -13.3 | -38.6 | 17.0 | 57.8 |
Source: Bloomberg and Saxo Group
Key risks
The 3D printing industry has experienced a lot of ups and downs since the late 1980s with the consumer hype period around 2013 burning a lot of investors causing sustained suspicion over the future of 3D printing. The industry is still small and there are still many obstacles that need to be overcome before additive manufacturing can take off in industry and thus the industry could experience another false start. Valuations are high and many of the companies in our basket are small and some have almost no revenue. This means that this is a very high-risk theme despite a potentially promising future. Another risk for investors is that large industrial firms create in-house additive manufacturing capabilities due to the need of deep integration into existing manufacturing processes and that the companies in our basket thus will not capture the value of 3D printing.
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