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  • Proto Labs Stock: +27.50% Potential with 3D Printing Demand and 3D Hubs Acquisition

Proto Labs Stock: +27.50% Potential with 3D Printing Demand and 3D Hubs Acquisition

Company Name: Proto Labs, Inc.
Ticker: PRLB.US
Entry Price: $175
Target Price: $220
Projected Yield: 25.70%
Time Line: 3 to 6 months
Risk: High
Position Size: 1%

About Proto Labs, Inc.

Proto Labs, Inc. (PRLB.US) is one of the largest manufacturers of small scale industrial prototypes and products for 3D printing industry. These products are used in medical devices, electronics, home appliances, automobiles, and consumer goods.

Among other things, Proto Labs offers:

  • Injection molding
  • CNC Machining
  • 3D Printing
    • The latter includes Stereolithography (SL), selective and direct laser sintering, multi jet fusion (MJF), PolyJet, and Carbon DLS. Proto Labs facilities are located in the US, the UK, Germany, and Japan.

      What's the Idea?

      Capitalize on a stock that may rise with better financial performance and 3D printing market boost.


      Buy Proto Labs Shares >>


      Why Trade Proto Labs? 

      Reason 1: Good Industry Potential

      Parts of complex shapes made of non-standard materials are used in many areas, such as device and tool manufacturing, medical components, robotics, construction, etc. When making prototypes, 3D printing or injection molding are the most technologically advanced solutions.

      In 2020, the 3D printing market was worth $16B; despite the pandemic, it is expected to reach $40.80B by 2024, with an annual growth of 26.40%, Statista Research reports. In case such expectations are met, Proto Labs may well benefit from it, as this is one of the largest players in the 3D printing and injection molding market. This can also be boosted with the company's business model, as it offers digital manufacturing, i.e. the customers may design the product they need themselves and then order its production and shipping.

      In early February 2021, the company updated its platform by improving the project management system and interactive design to analyze the tech components; it also optimized the way the employees interact.

      The production processes have been much simplified, thus adding yet another competitive edge. With more platform optimization and the general market recovery, Proto Labs may well expand its market share.

      Reason 2: 3D Hubs Acquisition

      In early 2021, Proto Labs acquired 3D Hubs for $280M, with additional payments to the previous owners of up to $50M scheduled for the next two years.

      3D Hubs is a platform where one can order 3D printing for any complex parts they need. Before being acquired, the company had over $25M in earnings and was growing rapidly, as more businesses started using 3D printing for fast prototyping and unique part manufacturing.

      This acquisition is expected to further boost Proto Labs, increasing both its value and the service range.

      3D Hubs may become a valuable asset for Proto Labs that will help to boost earnings, which declined significantly in recent years: e.g., in 2019, the earnings increased by only 3%. With this acquisition, Proto Labs is sure to get more with its 3D printing services, which now account for just 14.40% of its revenue.

      Reason 3: Financial Performance

      2020 was not a very much successful year for Proto Labs, as the number of customers significantly decreased during the lockdown. The orders for unique products decreased from 47,700 to 40,200, while the earnings fell by 5.30% YoY. Later on, however, it got much better,

      with the annual operating profit margin decreasing from 17.40% to just 13.70%, and and the net profit one, from 13.80% to 11.70%.

      Proto Labs has a low burden, with debt obligations of $19.40M and liquid assets of $161.60M (excluding 3D Hubs acquisition deal), as of late 2020. The company's operating cash flow decreased just a bit: from $116M to $107M, so it does not have any liquidity issues.

      Proto Labs shares plunged by 21% when the management declared a somewhat conservative outlook for Q1 2021: the Q1 earnings are expected at $108M-$118M, which does not meet the market expectations. Currently, Proto Labs' EV/S, EV/EBITDA, and Forward PE are at 5.6х, 23.3х, and 66x, respectively, which is relatively high, but in line with the competition.

      In case the numbers rise due to 3D Hubs acquisition, the financial indicators may become acceptable. Additionally, Benchmark raised its target price for Proto Labs stock from $165 to $235.

      How to Use the Idea?

      1. Buy Proto Labs shares at $175. 
      2. Allocate no more than 1% of your portfolio amount. To build a balanced portfolio, you can use recommendations by our analysts. 
      3. Sell the stock when the price reaches $220.

      How to Buy Proto Labs Shares? 

      If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.

      After opening an account, you can buy shares in either of the following ways:

      Freedom24 Web PlatformGo to the Web Terminal section, type PRLB.US (Proto Labs ticker in the NYSE) in the search box, and select Proto Labs Inc in the search results. Open a secure session in the trading window on the right, select the number of shares you want to buy, and click Buy.

      Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the search dialog that will show up, type PRLB.US (Proto Labs Inc ticker in the NYSE) and select Proto Labs Inc. in the results. You will then see the stock in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of shares you want to buy and click Buy.


      Buy Proto Labs Shares >>


      *Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Cyprus Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.