The good news: 3D Systems guided its 2014 revenues higher to a range between $680 million and $720 million, far above the $671.3 million analysts were expecting, according to data from Thomson Reuters. The company also says professional demand for their products were up in the most recent quarter.
Sounds good, right?
Now, the bad news: The three-dimensional printing company guided its earnings down to a range between $0.73 and $0.85 per share, far below Wall Street's previous expectations of $1.27 per share. That's because they're planning on spending a lot of money on research and development.
As well, 3D Systems cut its most recent quarter's earnings range because of weak demand in the consumer category. They now see earnings in a range between $0.83 and $0.87 per share for 2013, quite below the $0.96 averaged from 19 analysts.
That was enough to send shares of 3D Systems down 26% Wednesday morning, though it has rebounded a little from there. As well, other 3D printing companies – Voxeljet, Stratasys, and ExOne – all fell in by double-digit percentage points, while Onvo was also down nearly 6%. They, too, rebounded but were still down by Wednesday afternoon.
Since its highs at the start of the year, shares in 3D Systems are down 32% and were trading below $64 per share two hours before Wednesday's close. For one portfolio manager, that price is still high.
"It's a great company, great story," says Chad Morganlander, portfolio manager at Washington Crossing Advisors. "But, the valuation still is in bubble territory."
Even after the drop on Wednesday, 3D Systems' market cap is about $6.6 billion.
"It's trading at 49 times [price-to-earnings] multiple," says Morganlander. "As a value investor, we would look towards this company perhaps if it dropped down to below $50… But, at this point, I wouldn't marry the company, I wouldn't even date it."
Jonathan Krinsky, Chief Market Technician at MKM Partners, says $50 is a key technical level for the stock.
"We're really looking at the $50 level as a key area of support," says Krinsky, who notes that it was a previous resistance level that became support in 2013. ."Any pullback down to that $50 level is a spot to be buying and we would be looking to accumulate there."
To see the full discussion the 3D Systems with Morganlander on the fundamentals and Krinsky on the technicals, watch the video above.
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