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Align Technology (ALGN - Free Report) is a Zacks Rank #5 (Strong Sell) that is a global leader in digital orthodontics and the creator of the Invisalign clear aligner system.
Align recently reported earnings, with an initial negative price reaction turning positive. However, the stock has already drifted lower and with price near 2024 lows, investors have a tough choice to make if the downward trend continues.
Unfortunately, the company faces bearish growth prospects as its forward-looking guidance indicates cautious expectations for the U.S. market. Additionally, anticipated flat to slightly increasing revenues in Q4 2024 are raising concerns about the sustainability of its growth trajectory.
About the Company
Founded in 1997 and headquartered in Tempe, Arizona, the company focuses on developing innovative products and technologies that enhance the practice of dentistry.
Align is valued at $16 billion and has a Forward PE of 22. The stock holds Zacks Style Scores of “B” in Growth, but “F” in Value and “D” in Momentum. The stock pays no dividend.
Q3 Earnings
Align reported Q3 EPS of $2.35, surpassing the expected $2.31. However, revenue fell short, coming in at $977.9 million compared to the anticipated $991 million.
For Q4, the company has provided lower guidance, projecting revenue between $955 million and $1.02 billion, slightly below the expected $1.02 billion.
Case shipments increased to 617.2K, up from 602K year-over-year, while the non-GAAP operating margin improved to 22.1%, compared to 21.8% in the same period last year.
In light of these results, the company stated that it continues to evaluate and evolve its business to provide doctors with the best tools and resources while managing operational challenges.
Earnings Estimates
Looking at estimates, analysts have already started to cut their numbers for most time frames.
For the current quarter, analysts have lowered estimates from $2.55 to $2.45 since EPS. This is a drop of 4%.
Next quarter estimates see a slight uptick, but when you look down the road, the numbers take a negative turn.
For the current year, estimates have dropped from $9.36 to $9.29 since the earnings report.
Next year shows a bigger trend to the downside when you look over the last 90 days. Estimates have dropped from $10.51 to $10.15, or 3.4%, including another 1.2% since earnings.
Technical Take
The stock has been on a steady downtrend since March of 2024 when it traded as high at $335. Since then, ALGN is lower by 35%.
The prior 2024 lows are $196 so a break below the $200 level could signal trouble. Weaker hands likely have stop orders below that prior low and the next support level is not seen until $172 and then the COVID low is $127.
To the upside, the 50-day MA is $232 and the 200-day MA is $263. Until those levels are taken back by the bulls, the bears have control.
In Summary
Align Technology (ALGN - Free Report) is navigating a challenging landscape, marked by bearish growth prospects and a lackluster revenue outlook. While the company's recent earnings report showcased some positive metrics, including an EPS beat and improved case shipments, the underlying trends paint a concerning picture for investors.
For those interested in the Medical Supply space, a better option might be Becton, Dickinson and Company (BDX - Free Report) ). The stock is a Zacks Rank #2 (Buy) that is coming off a 6% EPS beat.
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Bear of the Day: Align Technology (ALGN)
Align Technology (ALGN - Free Report) is a Zacks Rank #5 (Strong Sell) that is a global leader in digital orthodontics and the creator of the Invisalign clear aligner system.
Align recently reported earnings, with an initial negative price reaction turning positive. However, the stock has already drifted lower and with price near 2024 lows, investors have a tough choice to make if the downward trend continues.
Unfortunately, the company faces bearish growth prospects as its forward-looking guidance indicates cautious expectations for the U.S. market. Additionally, anticipated flat to slightly increasing revenues in Q4 2024 are raising concerns about the sustainability of its growth trajectory.
About the Company
Founded in 1997 and headquartered in Tempe, Arizona, the company focuses on developing innovative products and technologies that enhance the practice of dentistry.
Align is valued at $16 billion and has a Forward PE of 22. The stock holds Zacks Style Scores of “B” in Growth, but “F” in Value and “D” in Momentum. The stock pays no dividend.
Q3 Earnings
Align reported Q3 EPS of $2.35, surpassing the expected $2.31. However, revenue fell short, coming in at $977.9 million compared to the anticipated $991 million.
For Q4, the company has provided lower guidance, projecting revenue between $955 million and $1.02 billion, slightly below the expected $1.02 billion.
Case shipments increased to 617.2K, up from 602K year-over-year, while the non-GAAP operating margin improved to 22.1%, compared to 21.8% in the same period last year.
In light of these results, the company stated that it continues to evaluate and evolve its business to provide doctors with the best tools and resources while managing operational challenges.
Earnings Estimates
Looking at estimates, analysts have already started to cut their numbers for most time frames.
For the current quarter, analysts have lowered estimates from $2.55 to $2.45 since EPS. This is a drop of 4%.
Next quarter estimates see a slight uptick, but when you look down the road, the numbers take a negative turn.
For the current year, estimates have dropped from $9.36 to $9.29 since the earnings report.
Next year shows a bigger trend to the downside when you look over the last 90 days. Estimates have dropped from $10.51 to $10.15, or 3.4%, including another 1.2% since earnings.
Technical Take
The stock has been on a steady downtrend since March of 2024 when it traded as high at $335. Since then, ALGN is lower by 35%.
The prior 2024 lows are $196 so a break below the $200 level could signal trouble. Weaker hands likely have stop orders below that prior low and the next support level is not seen until $172 and then the COVID low is $127.
To the upside, the 50-day MA is $232 and the 200-day MA is $263. Until those levels are taken back by the bulls, the bears have control.
In Summary
Align Technology (ALGN - Free Report) is navigating a challenging landscape, marked by bearish growth prospects and a lackluster revenue outlook. While the company's recent earnings report showcased some positive metrics, including an EPS beat and improved case shipments, the underlying trends paint a concerning picture for investors.
For those interested in the Medical Supply space, a better option might be Becton, Dickinson and Company (BDX - Free Report) ). The stock is a Zacks Rank #2 (Buy) that is coming off a 6% EPS beat.