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's Happening: Shares of leading 3D printing company Stratasys (SSYS -2.13%) closed up more than 9% on heavy trading on Thursday to $30.6. The rise followed two pieces of news released before the market opened: a weak earnings reports from 3D Systems (DDD +0.30%), and an upgrade from Wall Street research firm Citigroup.
Why It's Happening: Various sources are linking Stratasys' stock-price pop to one of the two different reasons noted above. It seems likely that both factors contributed to some degree to the rise.
First, fellow 3D printing bigwig 3D Systems reported second-quarter results before the opening bell rang on Thursday that didn't contain any hugely negative surprises, which has become par for the course recently among both major industry players. Triple-D did significantly miss estimates on the earnings end, reporting a profit of $0.03 versus the $0.09 analysts were projecting.
Revenue grew 12.5% year over year, to $170.5 million, falling somewhat short of estimates of $173.2 million. However, the report contained some faint signs that could possibly indicate that the slowdown in demand for the company's 3D printers has bottomed out. For instance, product revenue increased 10% year over year, while backlog inched up 3% from last quarter.
The second likely catalyst for Stratasys' jump was a Citigroup analyst upgrading the stock to buy from neutral, believing that the worst of the uncertainty surrounding customer demand was behind both of the industry leaders. Citigroup, however, didn't raise its one-year price target of $35.
While there may be some signs -- dim glimmers, more like it -- that the worst may be behind the two big 3D printing players, investors should still remain cautious, as both companies turned in very weak results. Further, the large stock-price pops on Thursday for both companies was surely heavily due to short sellers covering.
