Some of the most hated stocks in the market became some of the most loved, and that was certainly true with 3-D printing stocks.
Shares of ExOne, 3D Systems, and Voxeljet shot up a respective 5, 15 and 24 percent this week. All have very high short interest.
So was the move simply the result of short sellers getting squeezed out of their positions, or is there something else to the rally?
Erin Gibbs, equity chief investment officer for S&P Capital IQ Equity Research, believes the fundamentals are a factor. She notes 3D Systems lately increased its outlook.
“This is really about the fundamentals,” said Gibbs, who does not have a position in the 3D Systems. “They are growing at about 45 percent on earnings. Just recently… they raised their guidance and raised their revenues above analysts’ expectations. So there is a lot of positive going on for the company.”
Gibbs believes short sellers may help bring share prices closer to their value. “Short interest is at about 30 percent. But really half of that came in when the stock was trading at $75 or below. Our target fundamentally is [in the] low $70s. So we think that the shorts, as they get squeezed out, will actually help it drive to where we see our target.”
Richard Ross, global technical strategist at Auerbach Grayson, is also positive on 3D Systems, which was up 155 percent in 2013. But, toward the end of that year and the beginning of this one, Ross notes that the stock made a top in a head and shoulders pattern. After peaking at $97.28 in January, 3D Systems lost more than half its value by the end of April. It has since built up a base and has retraced much of its move up toward the neckline at $70 per share.
“That tells us that this sharp move off the low might have exhausted itself,” said Ross.
However, a break above the 200-day moving average and the $70 level could change things for the stock, according to Ross. “There could be a lot of upside here,” he said, “especially given that high short interest.”
To see the full discussion on 3D Systems, with Gibbs on the fundamentals and Ross on the technicals, watch the above video.
- Investment & Company Information