3D printing company Stratasys (SSYS) reported underwhelming third quarter numbers while cutting its full-year outlook this morning. Company executives warning of continued weak demand for its printers and Wall Street analysts argued that future growth remains in doubt, sending several Stratasys peers lower in Tuesday trading.

STRATASYS RESULTS: This morning, Stratasys reported Q3 adjusted earnings per share of 0c on revenue of 157.2M, as compared to analyst expectations for 5c on $174.5M. Looking ahead, the company cut its full-year EPS guidance to 13c-21c from 17c-43c and lowered its revenue view to $662M-$673M from $700M-$730M, below consensus estimates of 32c and $701.47M.

MANAGEMENT COMMENTARY: On a subsequent conference call, Stratasys CEO Ilan Levin remarked that the industry "continues to mature beyond general purpose design and engineering applications." CFO and COO Erez Simha noted that "MakerBot product and service revenue declined 29% in Q3 over last year, driven by the overall market weakness and timing of new product introductions. Market demand remains similar to levels in previous quarters, and sales cycles remain extended, which is contributing to slower hardware sales across all regions and business units... Despite softer sales for new systems, we are pleased with the strength of our recurring products and service revenue, which reflects stable system utilization and demand for our premium materials." Simha also reported that quarter-end inventory increased slightly to $127M as compared to $125.7M at the end of Q2, though he added that Stratasys continues to "focus aggressively" on managing those levels.

PIPER SAYS OUTLOOK GRIM: Calling the Q3 results "discouraging," Piper Jaffray's Troy Jensen reiterated a Neutral rating on Stratasys while cutting his price target to $21 from $23. The analyst highlights "poor" demand for the company's printer systems, which fell 20% year over year, and does not expect any significant improvement for the next several quarters. While Jensen remains "optimistic" that some growth remains in the 3D printing space, he believes it will primarily come in so-called direct digital manufacturing. Given Stratasys' focus on prototyping, he argues that its near-term outlook "remains grim," though Jensen concedes that further stock downside is limited given the already-low valuation.

CRAIG-HALLUM SAYS INDUSTRY IN BOTTOMING PROCESS: Craig-Hallum's Steve Dyer downgraded Stratasys to Hold while lowering his price target to $18 from $24. The analyst notes that a weak macro environment continues to impact sales, adding that "with limited visibility, we believe that any rebound in demand is still likely several quarters away." It is becoming clear, Dyer says, that increasing competition is necessitating continued product introductions to sustain market share, and while Stratasys recently debuted several "exciting" products, "they aren't likely to be material" for several years, the analyst contends. The 3D printing industry "remains in a bottoming process" with limited near-term growth, leading Dyer to step to the sideline "until resumption of growth becomes more certain."

PRICE ACTION: Shares of Stratasys have plunged 16% to $17.15 in afternoon trading. 3D printing peers 3D Systems (DDD), ExOne (XONE) and Voxeljet (VJET) have fallen 4%, 2.3% and 5%, respectively.