DDD’s Technical Picture Too Cloudy to Take a Stand

by Sam Collins | August 1, 2014 1:37 am

3D Systems (DDD[1]) — This stock has been on the Trade of the Day buy list since I recommended it on Aug. 12[2], under $47.50.On Feb. 21[3], after hitting my $80 target, I said it would be prudent to place a tight trailing stop at $78. That stop was triggered the next day.

On May 28[4], I said to buy DDD under $50, following the announcement of a 5.9 million-share offering of common stock, which would dilute shares and likely result in an immediate pullback. I advised traders to use a stop-loss at $43 and a trading target of $65. On July 1, DDD hit a high of $69.56.

But after being the darlings of Wall Street for two years, 3D printing stocks have fallen on hard times. On Thursday, DDD missed its Q2 earnings estimate by $0.02, reporting EPS of $0.16, down 20% year over year. And revenues of $151.5 million missed as well, with an expected $162.3 million. The stock fell over 10% on the day.

InvestorPlace feature writer Dan Burrows placed a sell on all stocks in the industry[5]. But S&P IQ upgraded their opinion of DDD to a “strong buy” from a “buy” saying, “Despite recent margin compression, we believe Q2 is the trough. We see recent acquisitions, including last night’s Simbionix announcement for $120 million, as positives. We also note short interest ratio over 30%.”

Technically, DDD’s gap down from its 50-day moving average is a negative. However, if the stock can hold above its April 30 closing low near $47, S&P may have picked a winner.

Those who own the stock or buy it on the S&P opinion should give it some room and place a stop-loss order at $45. If DDD turns and attempts to close the gap at $54.71 to $51.87, the high short interest could have the shorts scurrying to cover. However, until there is more price development, I think it is best to stand aside.

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Source URL: https://investorplace.com/2014/08/trade-day-3d-systems-ddd-9/

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