3D Systems (DDD) — I first recommended this stock on Aug. 12, when it was trading under $47.50. I recommended it again on Aug. 27, at $50.75, after Citigroup (C) analyst Kenneth Wong gave it a “strong buy” rating with a $60 price target, saying that the 3D printing market should more than triple in size over the next five years.
On Oct. 10, with the stock near $51, I confirmed my long-term bullish thesis on DDD amid profit-taking after a false breakout. Then, on Nov. 8, I noted that Brean Capital analyst Ananda Baruah reiterated a “buy” rating on DDD and raised the price target to $77 from $70.
On Monday, Bank of America (BAC) maintained a” buy” on DDD and raised its target from $69 to $90.
Technically, DDD broke from a cup-and-handle formation and then a compound top at $51.50 in mid-August on high volume. For all of September and part of October, the stock consolidated before reversing up from a close at $49.46 on Oct. 9. It then rocketed to a high of $71.34 on Nov. 6, and Monday made a leap to a new high of $84.85 on the BAC news.
Despite analysts’ optimism, DDD is now trading at over 80 times this year’s consensus earnings estimate and over 63 times 2014 estimates. And the stock is now more than 70% above its 200-day moving average and 35% above its 50-day moving average.
It appears to this technician that it is time to wait for DDD to fall into a buying zone rather than continue to chase this stock higher. Buy under $70 with a trading target of $80-plus.