Please ensure Javascript is enabled for purposes of website accessibility

Why Stratasys, Ltd. Is Falling Today

By Steve Heller - Apr 15, 2016 at 1:05PM

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

The stock was downgraded on valuation concerns.

Image source: Stratasys.

What: After Thursday's strong performance, shares of Stratasys (SSYS -0.27%) were selling off on Friday. Citi's Kenneth Wong downgraded Stratasys and 3D Systems (DDD -0.57%) on valuation concerns. At their lowest points before noon, Stratasys was down 11%, while 3D Systems was off 6.5%.

So what: In a note to investors, Wong downgraded Stratasys from buy to neutral, but kept his price target steady at $30 per share. Wong said, "We don't believe 'good enough results' will be sufficient with the recent boost in sentiment, and with industry checks still soft we believe near-term upside is limited."

In other words, the 38% rise in Stratasys' stock over the last three months is difficult to justify because the industry still faces headwinds. Wong's recent checks suggested that the fundamentals driving the industry remain largely unchanged. If true, it would mean that the notable slowdown in customer demand that Stratasys and 3D Systems experienced throughout 2015 is persisting. To recap, Stratasys believes customers bought too much 3D printing capacity in previous years, which in turn, prompted the slowdown in spending.

Wong also noted that Stratasys' rise in shares comes along with a rise in investor sentiment, and he thinks that the company needs to meet or beat analyst earnings estimates, rather than coming close to meeting them.

Now what: Between Thursday's upgrade of 3D Systems and Friday's downgrade of 3D Systems and Stratasys, it's clear that analyst are currently mixed about the 3D printing industry's near-term prospects. Until there's more visibility about where the 3D printing industry is headed, bouts of volatility are likely to continue as the bulls and bears battle it out.

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
$10.40 (-0.57%) $0.06
Stratasys Ltd. Stock Quote
Stratasys Ltd.
SSYS
$18.67 (-0.27%) $0.05

*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
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

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.