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: Stratasys (Nasdaq: SSYS) dropped 13% in intraday trading today after reporting better than expected earnings and announcing an acquisition.

So what: Stratasys bought privately held Solidscape for $38 million -- 8.8 times Solidscape's 2010 EBITDA and 2.8 times 2010 sales -- plus certain purchase price adjustments.  First-quarter EPS of $0.21 beat the consensus estimate of $0.18 and grew 50% year-over-year on revenue growth of 23%. Strong growth in customer usage of high-margin consumables -- revenue was up 36% year-over-year in the first quarter -- contributed to the top and bottom line improvement.   

Now what: It's hard to be sure exactly what's behind today's drop. The stock ran up more than 70% on unusually heavy volume beginning in late January before starting to weaken on Monday, begging the question of what certain buyers were expecting and why. Or investors may not like the Solidscape acquisition. The P/E ratio of 85 times is steep, but with the company appearing poised to continue delivering impressive EPS growth, it's not likely that valuation sparked this sell-off.

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