Three-dimensional (3D) printing is a “must-have competitive tool” and a key area of focus for investors in the robotics, automation, and artificial intelligence, or RAAI stocks universe, says a ROBO Global analyst.
ROBO Global Robotics & Automation Index captures the investment opportunity in robotics, automation and artificial intelligence.
Senior research analyst Lisa Chai wrote in a ROBO Global research update released over the weekend that a “high degree of customization” is causing the use of 3D printing for “end-part production to skyrocket.”
As a result, Merck & Co Inc (NYSE:MRK), Johnson & Johnson (NYSE:JNJ) and General Motors Company (NYSE:GM) spent more than $29 billion on R&D last year, and are investing heavily in 3D printing solutions to speed up product development and delivery across all verticals.
“The healthcare industry is also jumping on board," wrote Chai. "The reality of affordable, high-quality 3D printers that enable mass customization in low-volume production environments is transforming the manufacturing process for prosthetics, dental care, and consumer products. 3D printing software is also playing a major role in the upside trend.”
Separately, Piper Jaffray recently upgraded shares of 3D printing company Stratasys to Overweight from Neutral. Piper also raised Stratasys' price target to $31, sending the stock up 1.6% to trade at $26.11 on Monday.
The process of 3D modeling is reliant on the use of sophisticated modeling software that is used to design each product, specify exactly how each item is built, and then communicate that information to the 3D printer.
“It’s no surprise that software companies led acquisitions in the space in 2018. As integration with major software partners continues to evolve over the next several years, the use of 3D printing will reach new heights,” wrote Chai.
Health care through a 3D lens
The ROBO Global Senior research analyst also drew attention to Materialise NV (NASDAQ:MTLS) headquartered in Leuven, Belgium, which incorporates over 25 years of 3D printing experience into a range of software solutions and 3D printing services for the medical industry.
“Materialise was able to completely disrupt the hearing aid industry, spurring a total shift from traditional manufacturing to manufacturing using 3D printing — and causing the market share for 3D-printed hearing aids to jump from 20% to 100% in just two years,” wrote Chai.
She wrote the company’s next target is the eyewear industry: “Offering an open digital platform that uses 3D scanning, parametric design automation, and 3D printing, Materialise is helping eyewear designers like HOYA to custom design every frame to meet the needs of the individual customer, including both anatomical and aesthetic preferences.”
Health care has been “one of the biggest early adopters” of 3D printing with companies such as 3D Systems, Stratasys, and Materialise "paving the way to industry disruption," she added.
Materialise also offers Magics Print Metal software, an easy-to-use 3D printing solution that will facilitate access to metal 3D printing.
Index member Renishaw PLC (OTCMKTS:RNSHF) is the only UK business that designs and makes industrial machines that ‘print’ parts from metal powder. The company supplies products and services used in applications as diverse as jet engine and wind turbine manufacturing, dentistry, and brain surgery.
“While many 3D printing firms focus on simply building out existing designs using the efficiency of 3D printing processes, Renishaw focuses on design first, rethinking and reanalyzing every component to fully optimize the opportunity of 3D printing,” wrote Chai.
READ: ROBO Global says artificial intelligence, robotics will create ‘wave of new opportunities’ in 2019
“This approach is helping them deliver some of the lightest, strongest, and most innovative products available on the market today, including perfectly precise dental implants and 3D-printed pieces of the human skull used in traumatic brain surgery,” she added.
Chai acknowledged that 3D printing has been in and out of the news for years now. There’s been tremendous growth in product prototyping done with 3D printing. The technology’s ability to turn a computer design into a solid rendering quickly and economically is unrivaled.
Its additive nature means far less raw material waste and promising big cost advantages as actual manufacturing takes off. “The downward trend seems to have finally bottomed out, creating strong potential for an upside investment opportunity,” wrote Chai.
“In nearly every industry where custom manufacturing is needed, 3D printing is disrupting traditional practices. Leading the way in the footwear industry is Adidas AG (OTCMKTS:ADDYY),” she added.
Adidas is using 3D printing technology to design, prototype, and produce products that feature new materials and innovative shapes. The company has strategic plans to be the world’s biggest producer of 3D-printed footwear products as they aggressively scale productions.
The ROBO Global Index includes nearly 87 stocks across 12 subsectors in 14 countries. The index is built to minimize risk by limiting reliance on the largest-cap players, and structured to capture the growth of rapidly developing robotics and automation companies around the globe.
Since it’s the first major index in the robotics, automation and AI space, the ROBO index has several low-cost ETFs tied to it at the hip.
ROBO Global provides its expertise to the ROBO Global Robotics and Automation Index ETF (NYSEARCA:ROBO), which gained 0.4% to trade at $36.61 Monday.
Contact Uttara Choudhury at [email protected]