Why 3D Systems Stock Dropped 10% Today
What happened
Shares of 3D Systems (NYSE: DDD), which have been since the 3D printer maker released a "preannouncement" of its sales and earnings for Q4 last week, took a step back on Friday after investment bank J.P. Morgan downgraded the stock over valuation concerns.
In 12:30 p.m. EST trading, 3D Systems stock is down about 10%.
Image source: Getty Images.
So what
In a note covered on today, J.P. Morgan pointed out that "DDD is up 200%" year to date, and at the stock's yesterday closing price of $32, the "risk-reward tilts unfavorable here."
Simply put, no matter what the 3D printer companies may be , "we do not believe 3D Printing/Additive Manufacturing has suddenly hit an inflection point," warns the analyst.
Now what
What does J.P. Morgan think will happen? "We do think demand will improve with a post-pandemic recovery, and niche markets are opening up for these companies incrementally." However, the analyst thinks growth will probably "trend in the 5-10% CAGR range moving forward," rather than the high double-digit growth rate that might be implied by 3D's current 6.6 times sales valuation.
What might change the analyst's mind about that? It doesn't say, but here's one possibility: Right now, after of losing money, 3D is on the cusp of potentially reporting its first quarterly profit in four years. If and when 3D becomes a profitable company again, .
Stay tuned.
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