3D Systems Corporation Now Oversold, Price Targets Cut

3D Systems Corporation (NYSE:DDD) shares climbed right after the company’s latest earnings report, but it didn’t take long for them to come back down to Earth. The stock shot up suddenly Monday morning after that report but has since fallen below the approximate level at which it was trading on Friday before the earnings report.

After the 3D printer manufacturer’s earnings report, analysts from at least two firms cut their price targets on the company’s stock.

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3D Systems enters oversold territory

Writing in a post on Forbes, the folks at Dividend Channel say that 3D Systems is now in oversold territory. In order to determine this, they use what’s called the Relative Strength Index. That index assigns a number between 0 and 100 to measure momentum. Any stock with an RSI that’s under 30 is in oversold territory.

Today 3D Systems stock hit an RSI reading of 29.6, just barely slipping into oversold territory. According to Dividend Channel, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) has an RSI reading of 66.8. The firm suggests that 3D Systems’ low RSI reading could suggest that the selloff is beginning to end and that investors who like 3D Systems may now start looking for a good entry point to buy into the stock.

3D Systems price target cut by Imperial Capital

This week analysts at Imperial Capital cut their price target for 3D Systems in a report dated Nov. 11, 2014. Analyst Ashok Kumar reiterated his Outperform rating but lowered his price target from $50 to $42 per share.

The analyst believes the company has put together a “leading ecosystem of Additive Manufacturing hardware, materials, software and services.” The problem he sees though is organic growth rates that are lower than expected and falling margins, both of which are headwinds for the company’s stock price.

Why 3D Systems’ margins are suffering

In their report also dated Nov. 11, 2014, Goldman Sachs analysts Samuel Eisner, Nick Stuart and Stephanie Xu said they believe the weakness in the company’s margins is due to declines in gross margins for its printers. They think those gross margins will recover in the medium term but note that it’s unclear exactly when they will recover and how much they will recover.

Like Kumar, they also lowered their price target for 3D Systems, cutting it from $47 to $39 per share. They maintained their Neutral rating on the company’s stock because of the uncertainty surrounding it.