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Reasons to Hold on to Align Technology (ALGN) Stock for Now
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Align Technology, Inc. (ALGN - Free Report) is well poised for growth in the coming quarters, backed by expansion of its Invisalign portfolio and strength in its iTero scanners. However, uncertainties regarding its future product offerings and a tough competitive space are major concerns.
Over the past year, this currently Zacks Rank #3 (Hold) stock has rallied 216.4% compared with 37.9% growth of the industry and the S&P 500’s 48% surge.
The renowned global medical device player has a market capitalization of $47.57 billion. It projects 19.8% growth for the next five years and expects to witness continued strength in its business. The company surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average negative earnings surprise being 782.12%.
Let’s delve deeper.
Expansion of Invisalign Portfolio: We are optimistic about Align Technology’s Invisalign portfolio, which offers orthodontic treatment to straighten teeth without metal braces. The company, in February, announced the commercial availability of Invisalign G8 with SmartForce Aligner Activation. Over the past few months, Align Technology has been registering robust adoption of Invisalign by both adults and teenagers.
The company, in October 2020, announced the global availability of its next-generation proprietary treatment-planning software, ClinCheck Pro 6.0. Further, Align Technology has rolled out My Invisalign app and Virtual Care in various countries to enhance its digital footprint.
iTero in Focus: Align Technology’s focus on expanding work flow options of its leading iTero scanners buoys our optimism. The company witnessed a robust performance by its iTero scanners over the past few months on the back of continued strong adoption of the iTero Element 5D Imaging System, with strength in all regions with significant Element Flex sales in EMEA. Align Technology, during its last update in February, announced the launch of the iTero Element Plus Series next generation of scanners and imaging systems.
Further, the company’s China manufacturing facility in Ziyang has been running well, thus enhancing Align Technology’s capacity to manufacture Invisalign aligners and iTero imaging systems in the country.
Strong Q4 Results: We are upbeat about Align Technology’s fourth-quarter 2020 results despite the challenging business environment. Impressive international performance across geographies and increased shipment volumes buoy optimism on the stock. Robust segmental performances and margin expansions look encouraging. Continued adoption of the company’s digital platform has also been looking impressive. The company’s Consumer and Patient app was rolled out to more than 50 markets, thus instilling our confidence on the stock.
Downsides
Stiff Competition: Align Technology’s operation in a highly competitive industry may induce headwinds. The company has witnessed a continuous decline in average selling prices, primarily resulting from advantage rebate, promotional activity and product mix.
Product Offerings: Align Technology’s success depends on its ability to develop, successfully introduce and achieve market acceptance of new products or product offerings, along with obtaining regulatory approval or clearance of new products and improving existing products. However, there is no assurance that this can always be done successfully. Additionally, even if new products are successfully introduced, it may be difficult to gain market share and acceptance, particularly if doctors require education to understand the benefits of the new products or can evaluate their effectiveness after successfully using them to treat a considerable number of cases.
Estimate Trend
Align Technology has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its current-year earnings has moved 10.1% north to $9.13.
The Zacks Consensus Estimate for first-quarter 2021 revenues is pegged at $806.4 million, suggesting an improvement of 46.4% from the year-ago reported number.
Key Picks
Some other better-ranked stocks from the broader medical space are AmerisourceBergen Corporation , Cantel Medical Corp. and DENTSPLY SIRONA Inc. (XRAY - Free Report) .
Cantel’s long-term earnings growth rate is estimated at 19%. It currently carries a Zacks Rank #2.
DENTSPLY SIRONA’s long-term earnings growth rate is estimated at 20%. It currently carries a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Reasons to Hold on to Align Technology (ALGN) Stock for Now
Align Technology, Inc. (ALGN - Free Report) is well poised for growth in the coming quarters, backed by expansion of its Invisalign portfolio and strength in its iTero scanners. However, uncertainties regarding its future product offerings and a tough competitive space are major concerns.
Over the past year, this currently Zacks Rank #3 (Hold) stock has rallied 216.4% compared with 37.9% growth of the industry and the S&P 500’s 48% surge.
The renowned global medical device player has a market capitalization of $47.57 billion. It projects 19.8% growth for the next five years and expects to witness continued strength in its business. The company surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average negative earnings surprise being 782.12%.
Let’s delve deeper.
Expansion of Invisalign Portfolio: We are optimistic about Align Technology’s Invisalign portfolio, which offers orthodontic treatment to straighten teeth without metal braces. The company, in February, announced the commercial availability of Invisalign G8 with SmartForce Aligner Activation. Over the past few months, Align Technology has been registering robust adoption of Invisalign by both adults and teenagers.
The company, in October 2020, announced the global availability of its next-generation proprietary treatment-planning software, ClinCheck Pro 6.0. Further, Align Technology has rolled out My Invisalign app and Virtual Care in various countries to enhance its digital footprint.
iTero in Focus: Align Technology’s focus on expanding work flow options of its leading iTero scanners buoys our optimism. The company witnessed a robust performance by its iTero scanners over the past few months on the back of continued strong adoption of the iTero Element 5D Imaging System, with strength in all regions with significant Element Flex sales in EMEA. Align Technology, during its last update in February, announced the launch of the iTero Element Plus Series next generation of scanners and imaging systems.
Further, the company’s China manufacturing facility in Ziyang has been running well, thus enhancing Align Technology’s capacity to manufacture Invisalign aligners and iTero imaging systems in the country.
Strong Q4 Results: We are upbeat about Align Technology’s fourth-quarter 2020 results despite the challenging business environment. Impressive international performance across geographies and increased shipment volumes buoy optimism on the stock. Robust segmental performances and margin expansions look encouraging. Continued adoption of the company’s digital platform has also been looking impressive. The company’s Consumer and Patient app was rolled out to more than 50 markets, thus instilling our confidence on the stock.
Downsides
Stiff Competition: Align Technology’s operation in a highly competitive industry may induce headwinds. The company has witnessed a continuous decline in average selling prices, primarily resulting from advantage rebate, promotional activity and product mix.
Product Offerings: Align Technology’s success depends on its ability to develop, successfully introduce and achieve market acceptance of new products or product offerings, along with obtaining regulatory approval or clearance of new products and improving existing products. However, there is no assurance that this can always be done successfully. Additionally, even if new products are successfully introduced, it may be difficult to gain market share and acceptance, particularly if doctors require education to understand the benefits of the new products or can evaluate their effectiveness after successfully using them to treat a considerable number of cases.
Estimate Trend
Align Technology has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its current-year earnings has moved 10.1% north to $9.13.
The Zacks Consensus Estimate for first-quarter 2021 revenues is pegged at $806.4 million, suggesting an improvement of 46.4% from the year-ago reported number.
Key Picks
Some other better-ranked stocks from the broader medical space are AmerisourceBergen Corporation , Cantel Medical Corp. and DENTSPLY SIRONA Inc. (XRAY - Free Report) .
AmerisourceBergen’s long-term earnings growth rate is estimated at 11.4%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cantel’s long-term earnings growth rate is estimated at 19%. It currently carries a Zacks Rank #2.
DENTSPLY SIRONA’s long-term earnings growth rate is estimated at 20%. It currently carries a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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