Designs On This Gizmo Maker

Stratasys (SSYS) has a strange name. And it's odd in another way: It wasn't a hot stock when it went public in October, at 5 a share, but this year it has been a scorcher, climbing from 6 in early June to 143/4 on Aug. 29. The company lost $1.1 million in 1994, on sales of $3.8 million. So what's going on?

Analysts are projecting big numbers: They claim 1995 sales will jump to $9 million, with earnings of $164,000, or 7 cents a share. Next year, projections are even rosier: sales of $24 million and earnings of $2.3 million, or 74 cents. Pie in the sky? Not so, says analyst John Duffy of Brookehill Equities, who predicts the stock will hit the low 30s in two years.

Stratasys is in "rapid prototyping." It makes gizmos that let engineers create models out of plastic, working directly from computer designs, in a matter of hours. In many industries, prototypes are still produced by hand-sculpting or machining that takes weeks.

With such advanced technology, "the likes of General Electric, Dow Chemical, or Union Carbide would like to acquire Stratasys while it's cheap," says one investor. "It's a high-margin business."

One big holder, with 13.7%, is IBM. The stake stemmed from Stratasys' purchase in January of IBM's prototyping technology. The deal merged IBM's technology with Stratasys' system.

Joe Salvani, president of Salvani Investments, has acquired 3% of Stratasys and says it's one of the few companies that applies its own technology toward making an end-product. He says the company is working with Ford Motor for a device big enough to make actual-size prototypes of cars.

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