A key support level has emerged in the chart of Materialise N.V. (MTLS). If this level is broken, a breakout could occur.
MTLS is a provider of 3D printing services. It operates through three segments: Medical, Software, and Manufacturing. The Medical segment develops and delivers medical software solutions and medical devices. The Software segment develops and delivers additive manufacturing software solutions, and the Manufacturing segment delivers 3D printed products.
The company’s earnings were impacted by the COVID-19 pandemic as its production and sales activities came to standstill in the second quarter of last year. But management forecasts a return to normal this year due to the increasing need for 3D printing solutions, especially in the Medical segment.
MTLS had $131 million in cash as of the end of the year, compared with only $20 million in short-term debt. While revenue growth is down over the past year, sales are expected to rise 9.5% year over year this quarter. Earnings are also forecasted to soar 60% year over year in the current quarter.
Even with a fall in sales last year, MTLS is still trading at a very high multiple, with a trailing P/E over 5,000. Plus, its stock has shown bearish momentum since early February.
Take a look at the 1-year chart of Materialise MTLS below with added notations:
MTLS has formed a key level of support at the $30 (green) level over the past several months. The stock has made its way back down to that level again and if the support level were to break, lower prices will likely follow.
If the stock were to break below the support level, a short position could be entered.
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MTLS shares were trading at $30.17 per share on Tuesday morning, down $1.84 (-5.75%). Year-to-date, MTLS has declined -44.35%, versus a 5.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
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