What happened

Shares of the technology stock 3D Systems Corp. (NYSE:DDD) popped today after the company's stock received an upgrade from underperform to market perform by William Blair analyst Brian Drab.

3D Systems' stock jumped by as much as 12.7% today and was up by 6.5% as of 2:52 p.m. EST.

So what

Drab noted that 3D Systems' business is recovering well right now and the company's new management is moving in the right direction with its cost-cutting measures. Drab also said that he thinks the company will return to profitability next year.  

A white line graph on top of a blue bar chart.

Image source: Getty Images.

Ironically, the company's stock fell about 17% just two weeks ago when investors had a knee-jerk reaction to another investor note that Drab published, which questioned why 3D Systems' stock had rallied so strongly in October. 

Clearly, investors are overreacting to both positive and negative sentiment coming from analysts. 3D Systems' stock has been very volatile this year, and even with today's gains the stock is still down 16.3% year to date.

Now what 

In the company's third quarter, reported on Nov. 5, 3D Systems' revenue fell 13% year over year and its net loss widened from a loss of $16.8 million in the year-ago quarter to a loss of $72.9 million. While 3D Systems is trying to improve its balance sheet by divesting non-core assets and selling some of its software businesses, investors should still proceed cautiously with this company until it can prove that it's turning its business around.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.