Why 3D Systems' Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of 3D Systems (NYSE: DDD  ) jumped 10% today after coverage was initiated by an analyst.

So what: Analysts at Citigroup initiated coverage on both 3D Systems and competitor Stratasys (NASDAQ: SSYS  ) with a buy rating and giving them $60 and $125 price targets, respectively. They think the 3-D printing market could more than triple by 2017 as more manufacturers use the technology.  

Now what: Before getting too worked up about an analyst upgrade let's not forget that analysts have little incentive to get these calls right, as fellow Fools John Reeves and Ilan Moscovitz noted earlier this summer. With a trailing P/E ratio of 120 and a forward P/E ratio of 40, it's also important to remember that 3D Systems is also priced for a lot of growth in the future, so investors already expected this type of projection. Basically, I don't think an analyst call is a reason to buy the stock today and wouldn't change my investment thesis on 3D Systems or the industry because of it.

3D Systems has been one of the top stocks on the market over the past two years and our Motley Fool newsletters called the explosion in demand long ago. Find out why it was a top pick and read all about the biggest industry disrupters since the personal computer in "3 Stocks to Own for the New Industrial Revolution." Just click here to learn more.


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Comments from our Foolish Readers

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  • Report this Comment On August 26, 2013, at 4:43 PM, WineHouse wrote:

    This article did not explain anything! Why did the author bother to write it? Why was it posted on the web?

  • Report this Comment On August 26, 2013, at 6:53 PM, EvanBuck wrote:

    @WineHouse The Motley Fool has pledged to write an article whenever one of its "10% Promise" series stocks goes up or down 10% in a day. Personally, I think that this article actually succinctly explained the jump quite well and gave some good forward-looking guidance. Succinct does not necessarily equal uninformative like you suppose.

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