Can 3D Systems Buck Negative Earnings Trends?

Now, 3D is set to report its fourth-quarter earnings Thursday before the market opens. Thomson Reuters has consensus estimates of $0.25 in earnings per share (EPS) and $202.32 million in revenue. The fourth quarter from the previous year had $0.19 in EPS and $154.82 million in revenue.

As we have recently noted, the short interest rose in three of four of the 3D printing stocks followed by 24/7 Wall St. All four of them saw short interest increase in the period before that. That is quite a lot of bets that things have turned sour in the industry. In fact, 3D Systems was one of the worst performing large stocks in 2014.

Stratasys Ltd. (NASDAQ: SSYS) shook investors earlier this month when it released 2015 fiscal year revenue guidance that was below consensus estimates. The company said its plan was to invest more in order to offer a broader range of products ahead of what it sees as manufacturers that are poised to increase adoption of additive manufacturing in various industries. In other words, they are boosting spending to maintain growth. 3D’s stock dropped over 5% on this news from Stratasys.

Just a few days ahead of earnings, a couple of analysts weighed in on 3D. Needham maintained a Buy rating but lowered its price target to $40 from $44, and Imperial Capital maintained an Outperform rating but lowered its price target to $36 from $42.

With the implied volatility readings in 3D options being above 100% in all of the close strike prices, in both puts and calls, options traders appear to be looking for a move of up to 10% in either direction based upon the closest speculative options strikes.

Another area to point out is the chart of 3D Systems. Shares used $28 as support in December, January, and in February. Now shares are close to $30, after having risen to as high as to just above $32.50. It turns out that the 50-day moving average is at $30.56, and the 50-day moving average (which has been drifting lower) has almost acted as a suction mechanism for the last week.

Shares of 3D were down 2.6% at $30.02 at Thursday’s closing bell. The stock has a consensus analyst price target of $40.65 and a 52-week trading range of $27.00 to $79.77.

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