3D Systems: Buy or Balk?

After reaching over $44 a share last week 3D Systems Corporation (DDD) has fell 12% to close today at $38.27.  No real news has been published about 3D since July when the company reported a stellar conference call and hit a new 52-week high. 

Since July 3D Systems shares have cooled down 14.6%.  3D printing in general is definitely the future and 3D Systems is going to continue to enjoy the fanfare and profits of a growth industry.  We learned during the July Q2 call that revenue increased 52% to $83.6 million when compared to Q2 2011 on 20% organic growth. The company reported growth from all its revenue categories, led by a 112% increase in its printer units sold. 3D Systems please the Street with its 2012 guidance expecting its revenue to be in the range of $330 million to $360 million.

There's no doubt profit taking could be pushing down 3D Systems.  DDD has increased 165% already in 2012 and that's including the recent pullback. 

Looking at the DDD chart, every time price has touched the bottom of its rising channel, a rally has ensued. Price just touched the bottom of its rising channel today. Another reason to buy DDD in the short term is that its competitor Stratasys (SSYS) printed a nice looking hammer candle today - shares of SSYS hit a low of $59.32, but turned on a dime and rallied all the way back up to $64.73 to close out the day. DDD usually trades in tandem with SSYS, so we think DDD will follow suit.

MASTERY Bottom line:

After a 14% drop since hitting a new 52-week low in July, 3D Systems is a stock to watch.

3D Systems (DDD) Charts