Velo3D (VELO) stock is in focus after the company signed a Cooperative Research & Development Agreement with the U.S. Army DEVCOM GVSC to develop additively manufactured parts for ground combat vehicles.

The agreement with the U.S. Army arrives after a sharp reset in sentiment, with a 1-day share price return of -16.76% and a 7-day share price return of -30.39% following a very large 90-day gain of 159.04%. However, the 1-year total shareholder return of -17.76% and 5-year total shareholder return of -99.75% point to longer term investors still being well underwater, so recent momentum looks fragile rather than firmly established.

If this kind of defense focused 3D printing story has your attention, it could be a useful moment to see what else is out there in aerospace and defense stocks.

With Velo3D now working alongside the U.S. Army and the share price still well below its longer term highs, are investors looking at an underappreciated defense 3D printing player, or has the market already priced in future growth?

Most Popular Narrative: 150.8% Overvalued

Velo3D's most followed narrative points to a fair value of $6 per share, which sits well below the recent closing price of $15.05, setting up a sharp valuation gap for investors to weigh.

Expansion of the rapid production services platform into long term, recurring production contracts for defense, space and semiconductor customers should steadily raise revenue visibility and support structurally higher gross margins as mix shifts toward services.

Want to know what kind of revenue mix, margin path and earnings profile could justify paying more than double that fair value estimate? The narrative focuses on recurring contracts, richer service economics and a future profit multiple that is significantly higher than what many industrial names typically trade at. Curious which assumptions have to line up for that to make sense? The full story connects those moving pieces into one valuation case.

Result: Fair Value of $6 (OVERVALUED)

However, this hinges on continued defense and space spending. Any funding delays or slower additive manufacturing adoption could quickly undercut those bullish assumptions.

Build Your Own Velo3D Narrative

If the current narrative does not quite fit how you see Velo3D, you can review the same data and form your own view in just a few minutes by starting with Do it your way.

A great starting point for your Velo3D research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.