Option Traders, Analysts Split on Stratasys, Ltd. (SSYS)

Stratasys, Ltd. has largely been a target of put buyers, short sellers

by Alex Eppstein

Published on Dec 26, 2014 at 2:26 PM
Updated on Apr 20, 2015 at 5:32 PM

Like sector peer 3D Systems Corporation (NYSE:DDD), 3-D printing issue Stratasys, Ltd. (NASDAQ:SSYS) is charging higher this afternoon, up 4.1% at $84.41. Year-to-date, however, the latter has tumbled roughly 37%. A look at Wall Street reveals that this longer-term technical trend has translated into high levels of pessimism -- in the options pits and beyond.

For starters, during the last 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SSYS has racked up a put/call volume ratio of 0.69 -- higher than two-thirds of all other readings from the last year. In other words, traders have shown an unusually strong preference for long puts over calls in recent months.

If that's not enough, short interest on SSYS spiked more than 24% during the two most recent reporting periods. As such, short interest now accounts for 21.7% of the equity's total float, which would take more than six sessions to cover, at typical daily trading levels.

It seems the only ones not on SSYS' bearish bandwagon are analysts. Fourteen out of 18 brokerage firms covering the shares have handed out "buy" or better ratings, versus four "holds" and not a single "sell." Plus, the stock's consensus 12-month price target of $129.83 sits in territory not explored since mid-September, and represents a nearly 54% premium to the security's current perch.

While today's rally is impressive, it isn't altogether unexpected -- Stratasys, Ltd.'s (NASDAQ:SSYS) 14-day Relative Strength Index (RSI) of 31 sits near "oversold" territory. Should the equity resume its prevailing downtrend, a round of downgrades and/or price-target cuts could exacerbate selling pressure.

Daily Chart of SSYS since September 2014


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