This Is a Make or Break Earnings for 3D Systems -- and 3D Printing Players

Now the consensus estimate from Thomson Reuters is $0.20 in earnings per share, down from $0.26 per share a year ago. Revenues are expected to be $154.9 million, up 52% from a year ago. If 3D Systems gives new guidance, those estimates for the next quarterly report are $0.17 in earnings per share on about 47% revenue growth to $149.9 million.

What investors need to know now is that 3D systems has fallen by one-quarter of its value from the peak. Another issue is that 3D Systems was trading above $80 just last week. Shares closed lower at $74.66 on Thursday.

Another issue is that analysts have become much less aggressive on their price targets since the 3D Systems warning. Thomson Reuters shows a consensus price target of $80.31. Bank of America Merrill Lynch just downgraded the company to Underperform (effectively a sell rating) this week, down from Buy.

Another concern is that, despite close to 40% revenue growth expected in 2014, this company trades at almost 100-times this year’s expected earnings.

The chart tells another story of caution as 3D’s stock price is right in between its 50-day and 200-day moving averages. The 50-day moving average is up $82.27, and the 200-day moving average is down at $61.67. That should leave a lot of support down lower in the 60s, which many investors hope does not happen again. Then that 50-day moving average has been a resistance points twice over the last two months.

Thursday’s pre-earnings reaction was down 1.7% to $74.66, against a 52-week range of $27.88 to $97.28. 3D Systems had a market cap as of $7.67 billion as of the close.

Our take: Now that the air is coming out of the bubble, Wall Street is going to look closer at the 2015 to 2017 prospects this quarter or next. At that point the proper valuations of 50-times forward earnings or something much different will need to come into the debate. The biggest hope of all ahead of earnings is that Wall Street analysts set the bar low enough.