What happened

Shares of 3D Systems (DDD 2.17%), 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.