The 3D printing sector is likely going to come in on Monday wishing that Barron’s would have just kept picking on master limited partnerships (MLPs). Instead, the formerly hot sector of 3D printing was targeted by the weekend financial publication.
Barron’s was quick to point out that shares of 3D Systems Corp. (NYSE: DDD) were up 370% over the past two years as the industry leader. Stratasys Ltd. (NASDAQ: SSYS) was shown to be up some 230% or so in the past couple of years. Barron’s even included the recent IPOs in 3D printing, with The ExOne Company (NASDAQ: XONE) up 140% and Voxeljet A.G. (NYSE: VJET) up more than 160% since coming public.
The first thing we would point out here is that all these stocks have sold off handily from their recent highs. This is easy to see as follows:
- 3D Systems closed at $67.31 on Friday against a 52-week trading range of $27.88 to $97.28, for a drop from the high of almost 31%. Its earnings response shows investors betting on growth.
- Stratasys closed at $114.50 on Friday against a 52-week trading range of $67.03 to $138.10, for a drop from the high of over 17%. Stratasys just recently gave good results and guidance.
- ExOne closed at $44.92 on Friday against a 52-week trading range of $27.60 to $78.80, for a drop from the high of about 43%.
- Voxeljet closed at $34.19 on Friday against a 52-week trading range of $19.30 to $70, for a drop from the high of over 50%.
It is no secret that 3D printing players have to lower their guidance. This is why the shares have been hit so hard. Barron’s went as far as to say that 3D Systems is “better at printing press releases than profits,” with the company lowering the bar repeatedly. Even after the drop, Barron’s pointed out that 3D systems trades at about 84-times expected earnings.
Stratasys was listed as having its deal with Hewlett-Packard canceled, with no real explanation. The two had partnered to make 3-D printers under the H-P brand. H-P has also said in recent months that it would like to enter the 3D printing segment on its own, again with little detail.
We had recently highlighted that value investor Whitney Tilson was pounding the table calling the 3D printing sector a dream short. Barron’s, of course, included his comments in their weekend report.
3D printing stocks remain targeted by short sellers. Barron’s just delivered the short sellers a gift for Monday. Now the question is whether these companies can live up to long-term expectations – or hype. Also, a 3D printing mutual fund has been launched.
This is a sector where the future remains less than certain. Some of these companies may be huge winners; some are likely to lose. It seems unfair to bash every player in the group, and this weekend’s bash from Barron’s may likely turn out to be only half of the story down the road.