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Align Technology International Growth Solid, Rivalry Rife

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On Aug 20, we issued an updated research report on Align Technology, Inc. (ALGN - Free Report) . The stock carries a Zacks Rank #3 (Hold).

Notably, Align Technology manufactures and markets clear aligner therapy, intra-oral scanners and CAD/CAM (computer-aided design and manufacturing) digital services used in dentistry, orthodontics and dental records storage.

Shares of the company have outperformed its industry over the past year. The stock has skyrocketed 106.1% in comparison to the industry's 14.7% growth.  Align Technology ended the second quarter on a solid note. We are optimistic about its continued strength in Invisalign volumes. Also, the company’s Invisalign Technology prospects and growth in North America and outside are encouraging, particularly in the Asia-Pacific and EMEA regions.

In May, Align Technology announced the opening of its first Invisalign treatment planning facility in Europe. This apart, the company announced the addition of Invisalign First clear aligners for treatment of younger patients with early mixed dentition. It commercially launched the offering for Invisalign-trained doctors in the United States, Canada, Australia, New Zealand, Japan and the EMEA region, starting from July 2018 onward. Solid developments in Invisalign are likely to provide Align Technology with a competitive edge in the U.S. MedTech space.

The strong uptake of iTero scanners across all geographies is impressive as well. Further, Align Technology’s receipt of CFDA (China Food and Drug Administration) approval to manufacture the iTero Element intraoral scanner in China buoys optimism. We are also upbeat about the company’s expansion of the iTero Element portfolio with the introduction of iTero Element 2 and iTero Element Flex scanners.

On the flip side, an adverse foreign exchange translation persists to raise concerns for Align Technology’s international operations. Also, escalating costs and expenses are weighing on its margins. Moreover, a tough competitive landscape and other macroeconomic headwinds pose a threat to the stock.

Key Picks

A few better-ranked stocks in the MedTech space are Inogen Inc (INGN - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Patterson Companies, Inc. (PDCO - Free Report) . While Inogen and Patterson Companies carry a Zacks Rank #2 (Buy), Integer sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen has a long-term expected earnings growth rate of 22.5% while the same for Integer Holdings and Patterson Companies is pegged at 15% and 8.3%, respectively.

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