Please ensure Javascript is enabled for purposes of website accessibility

Why 3D Systems Stock Dropped 10% Today

By Rich Smith - Updated Jan 15, 2021 at 1:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the 3D printer maker had been gaining for days before stepping back today.

What happened

Shares of 3D Systems (DDD 3.23%), which have been performing really well 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%.

Red stock arrow breaking up and showering down in pieces over a city below

Image source: Getty Images.

So what

In a note covered on StreetInsider.com 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 saying at their investor conferences, "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 15 straight quarters 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, the story might change.

Stay tuned.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

3D Systems Corporation Stock Quote
3D Systems Corporation
DDD
$10.56 (3.23%) $0.33

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
332%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.