Faro Stock to Further Gain From Increasing Data Demand
Machines control our world. And we control the machines, because we have the tools and technology to do so.
Three-dimensional (3D) scanning is one such technology. It is changing the way large-scale measurements are done. It is redefining how engineers build 3D models on a computer, which saves huge amounts of money.
FARO Technologies, Inc. (NASDAQ:FARO) is a leading player in this space. Its 3D technology helps in the accurate measurement of objects or structures. This data is then used to build 3D models in the digital world. These models form the basis of what is actually built in the real world.
FARO’s products are in great demand, since different industries need to capture and analyze a large amount of 3D data for building their models.
The company’s products help reduce inefficiencies and costly reworks, and this bodes well for FARO stock.
Looking at the wide applications of this relatively new technology, MarketsandMarkets Research Private Ltd has estimated the 3D scanner market to touch $5.9 billion by 2023, from $3.4 billion in 2016. (Source: “3D Scanner Market…Global Forecast to 2023,” MarketsandMarkets Research Private Ltd, last accessed June 13, 2018.)
The market demands 3D data, and this is no surprise. Data requirements for construction, healthcare, and manufacturing are becoming more complex. Conventional equipment cannot meet this requirement. Hence, FARO’s 3D technology will likely continue to see rising demand.
Take the automotive sector, for example. Just look at the number of new car models coming out these days. This situation would not have been possible a few years ago. This has been made possible thanks to flexibility in production and the use of robots, together with advanced software and digital technology.
3D scanners measure millions of coordinates on a production line. This data is then used to create a virtual 3D image of the facility. Various simulations are run to find out how to convert the production line in order to produce the desired car model.
Then consider the healthcare industry. Numerous applications are just not possible without 3D scanning. The technology helps in designing and creating customized prosthetic devices.
3D scanning and processing software can easily turn the collected 3D data into an accurate 3D model.
In construction, laser scanning captures a site’s shapes, and this data is uploaded into a 3D model. This saves a huge amount of money and time when something like the renovation of an old building is considered.
The building is laser-scanned, and precise measurements are taken. This helps in planning and executing all of the activities on the project, simply from a 3D model.
FARO Technologies has been performing well on the financial front. It announced its first-quarter earnings in April. Sales went up by 13.8% through the year and touched $92.8 million.
FARO delivered double-digit sales growth, increased gross margins, and continued growth in its emerging verticals—with a 62.9% increase in sales. (Source: “FARO Reports First Quarter 2018 Financial Results,” FARO Technologies, Inc., April 25, 2018.)
The top priority for the company is to lead in the 3D tech space by increasing its investments in research and development activities and by acquiring new technology companies.
FARO stock has gone up by almost 50% over the last year, as shown on the following stock chart.
Chart courtesy of StockCharts.com
With 3D scanning, a real-world object or environment is analyzed to collect data on its shape and appearance. This data is then used to construct digital 3D models, which help in building actual structures with maximum accuracy.
As 3D technology becomes more widespread, FARO stock will likely further gain in the coming years. Investors could consider the stock on any sign of price weakness.