Shares of three-dimensional printing products and services provider 3D Systems Corporation (NYSE: DDD)
have been languishing as the company attempts to stage a turnaround after three-years of restructuring efforts. Three-dimensional printing is yet another cautionary example of the Gartner Hype Cycle as DDD shares peaked at 97.28 in January 2014 only to plunge to lows of 6.47 in August 2019 as the hype wore off as momentum vanished. While the printer segment continues YoY declines, the healthcare segment is improving as Q3 2019 indicated six-percent YoY growth. The company signed a bioprinting pact with Collplant Holdings (NASDAQ: CLGN)
on Jan. 16, 2020. This helped shares finally breakout of the single-digit price range its been stuck in for nearly a year. President and CEO Vyomesh Joshi announced plans to retire on Feb. 6, 2020. Joshi will remain until a replacement is found. Coincidentally, competitor Stratasys Inc. (NASDAQ: SSYS)
has also been in search of a new CEO.
Analysts are on opposite sides of the fence regarding the DDD turnaround narrative. Craig-Hallum upgraded shares of DDD to a BUY on Jan. 13, 2020 sending shares up towards the 12 range. Loop Capital proceeded to downgraded DDD to a sell three-days later to plummet shares back down to 10.67 lows. Piper Sandler downgraded DDD to Neutral on Jan. 28, 2020, which actually rallied shares back towards the 12.56 highs before settling back down heading into earnings.
DDD reports Q4 2019 earnings post-market on Weds, Feb. 26, 2020, followed by a 4:30pm EST conference call. Consensus analyst estimates are for a profit of 0.01 EPS on revenues of $163.5 million. In the prior Q3 2019 earnings results, top line revenues came in negative (6-percent) YoY but shares rallied on improved operating expenses and inventory reductions. The company painted a narrative of stabilization efforts paying off in 2020 with new production materials and metal factory systems solutions by end of Q1 2020. Short interest is 25.89-percent of the float as of Jan. 31, 2020. Shares are susceptible to a short squeeze if the company can continue to press the turnaround story off Q4 results and/or find a reputable CEO.
Rifle Chart Technical Analysis Trajectories: Longer-Term
We use the rifle charts on wider time frames to lay out the playing field suitable for swing traders and investors. DDD has been making lower lows and lower highs on the monthly chart. The declining stochastic peaks is a bearish sign, but the current bullish mini pup could break the stochastic divergence top trend line on a bullish earnings gap. The monthly upper Bollinger Bands sit at the 19.97 Fibonacci (fib) level. The weekly and daily BBs are both showing expansion indicating a range break is setting up. The direction of that break remains to unfold. Both the weekly and daily stochastic are stalled at the 80-band stochastic indicating a make or break heading into the earnings release.
Three-dimensional printing and services stocks with positive correlation to DDD shares start with competitor SSYS. If DDD has an exceptional price gap with follow-through north of 20-percent, sympathy stocks to consider trading include: Proto Labs (NYSE: PRLB), Materialise (NASDAQ: MTLS) and Voxeljet (NASDAQ: VJET).
Trading Game Plan for Earnings Gap:
This information is accommodative to intraday and short-term traders looking to play the earnings gap. DDD reports Q4 2019 earnings Weds. Feb. 26, 2020, immediately after the close followed by a 4:30 pm EST conference call. Usually, optimism tends to build heading into the conference call when shares take a hard gap down. DDD is a thick stock that starts with an impulse price gap that eventually tightens the range. Nimble post-market traders can scalp the price gap reversion levels, but most should wait for the morning session off the opening bell. Traders can expect scalps ranging from 0.25 to 0.50 in the first 20-minutes as ranges and spreads eventually contract. Reversion scalps off the key price inflections levels can be played for the second gap reaction then shift focus to the third reaction trend move. The gap price reversion levels for the upside price gaps are: 12.94 fib/weekly upper BBs, 12.94 fib, 13.92 fib, 14.50 fib and 15.94 fib. Downside gap reversion price levels are: 10.84 fib, 9.91 fib/gap fill, 8.99 fib, 7.68 fib/sticky 2.50s zone. Traders can trade the in-between fibs and sticky 2.50s levels intraday for price reversions on the first tests. If DDD gaps over 20-percent, then consider trades on SSYS sympathy play first and work down the aforementioned sympathy stock tiers.