Shares of 3D printer maker 3D Systems (NYSE:DDD) closed 7.6% higher on Tuesday after analysts at Craig-Hallum doubled down on an existing buy rating on the stock, and insisted it is underpriced at just $5 and change. Craig-Hallum even predicted the share price will more than double to $11 within a year.
Seen in that context, today's 7.5% rise in share price was actually pretty modest. So why does Craig-Hallum think this stock will double?
According to an article on StreetInsider.com, the analyst sees several near-term catalysts that could unlock shareholder value at 3D. In particular, the firm believes that 3D may be close to selling one or more major noncore assets, which would raise cash and obviate the need to sell stock to remain solvent.
But that just highlights the fact that 3D is sort of in dire financial straits. In contrast to its nearest rival Stratasys (NASDAQ:SSYS), which is going into this recession cash-rich and financially sound, 3D Systems currently has more debt than cash on its books. And through the first half of this year, it was burning cash at an annualized run rate of more than $56 million, according to S&P Global Market Intelligence.
The sooner 3D gets that fixed, the sooner it will be worth the price target Craig-Hallum has assigned to it.