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Arcam AB Message Board

  • rniesen77@gmail.com rniesen77 Mar 4, 2014 12:43 PM Flag

    Support for stock price at $33.40 - Fibonacci retraced to 38.2% line

    For technical analysts it is worth applying a Fibonacci retracement series to the weekly stock chart. If you use the high in the week of 1/27/2014 and the low in the week of 07/01/2013 (where growth accelerated) you will find a nice fit with the data. The current price is just about to find support at the 38.2% retracement line at ~$33.33. In 2013 the price bounced off this support level four times -- weeks of 10/21, 12/2, 12/16, and 12/23.

    How significant is this? The weight you give to this idea depends upon your thesis for why Arcam is declining and upon the faith you have that investors will behave as they typically do. IMO the decline was a correction investors took because they were unimpressed with Arcam's latest financial performance. There were high expectations Arcam would have exceeded estimates significantly by enhancing their production capacity. That is still a hope of investors. I continue to have strong commitment to the stock because they have numerous competitive advantages -- EBM has superior features over laser sintering technologies (speed, weld pool temperature, infill density), Arcam will expand their production this year (upping revenue and profit) --- which gives them a high likelihood of improving their financials. This will definitely bump their share price. But that is not all.

    Because their stock value is depressed, and they are the EBM leader, they are an attractive acquisition candidate by companies looking to secure access to metal printers on a large scale. GE Aviation bought Morris Technologies in 2012 for this reason. Importantly, given the attractive growth this market, any buyout would likely demand a significant premium. So what is most important for interested investors now is calling the price bottom. As I stated above, there is a good case to be made that Arcam will find support at around $33.40.

    Please weigh in with your thoughts.

    Sentiment: Strong Buy

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