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Here's Why Investors Should Hold Align Technology (ALGN) Now
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Align Technology, Inc. (ALGN - Free Report) has been gaining from Invisalign portfolio expansion. ALGN’s slew of strategic alliances looks impressive. However, economic uncertainty and stiff competition raise apprehension.
In the past year, this Zacks Rank #3 (Hold) stock has gained 32.1% compared with 19.8% growth of the industry and a 15.9% rise of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $25.22 billion. Its expected long-term earnings growth rate of 17.2% is ahead of the industry’s anticipation of 12.2%.
Let’s delve deeper.
Growth Drivers
Invisalign Portfolio Expansion: Align Technology’s Invisalign portfolio offers orthodontic treatment to straighten teeth without metal braces.
During first quarter, ALGN launched Invisalign Comprehensive three and three product in most markets. Instead of unlimited additional aligners within five years of the treatment end date, this latest configuration offers Invisalign comprehensive treatment with three additional aligners included within three years of treatment end date.
The initial adoption of the product garnered a positive response. Management expects that its impact will be more meaningful and provide doctors with desired flexibility. Further, this will allow the company to recognize deferred revenues over a shorter period of time compared with the traditional Invisalign comprehensive product.
Strategic Alliances: Align Technology's slew of strategic alliances looks promising. It has well-established relationships with many DSOs, especially in the United States, and is continuously exploring collaboration with others that drive adoption of digital dentistry. Recently, it announced a $75 million equity investment in Heartland Dental.
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During first quarter, ALGN delivered 7.8 billion impressions and had 22.1 million visits to its websites. IT continues to invest in top media platforms such as TikTok, Snapchat, Instagram and YouTube across markets.
iTero in Focus: Align Technology has been focusing on expanding work-flow options of its leading iTero scanners. In first quarter, services revenues increased year over year. This was primarily driven by higher subscription revenues resulting from large number of iTero scanners in the field. The company also had higher non-systems revenues reflecting increased scanner rentals, upgrades and certified pre-owned or CPO leasing programs.
Earlier in 2022, the company announced a strategic collaboration with Desktop Metal to supply iTero Element Flex scanners to Desktop Labs. The iTero Element Flex is now the preferred restorative scanner for Desktop Labs and will connect dentists directly with a suite of offerings from Desktop Labs.
Downsides
Competitive Landscape: Align Technology faces significant competition from traditional orthodontic appliance (or wires and brackets) players such as 3M’s Unitek, Danaher Corporation’s Sybron Dental Specialties and Dentsply International. It also competes with productions similar to Invisalign Technology, such as products from Ormco Orthodontics, a division of Sybron Dental Specialties.
Economic Uncertainty: The general slowdown in the United States and certain international economies is having a negative impact on consumer spending and affecting Align Technology’s business fundamentals. ALGN attributed the waning earnings to this macroeconomic crisis that affected the overall dental market and led to continued soft dental sales of the company. Dental procedures are primarily elective in nature and are deferred when unemployment levels rise.
Estimate Trend
In the past 90 days, the Zacks Consensus Estimate for Align Technology’s 2023 earnings has moved 4.1% north to $8.31 per share.
The Zacks Consensus Estimate for ALGN’s 2023 revenues is pegged at $3.89 billion, suggesting a 4.2% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , HealthEquity, Inc. (HQY - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%.
Hologic has gained 15.4% compared with the industry’s 12.5% growth in the past year.
HealthEquity, currently sporting a Zacks Rank #1 (Strong Buy), has an expected long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
HealthEquity has improved 9% against the industry’s 16.2% decline in the past year.
Boston Scientific, presently carrying a Zacks Rank #2, has an anticipated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed twice, the average surprise being 1.9%.
Boston Scientific has risen 39.4% against the industry’s 22.1% decline in the past year.
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Here's Why Investors Should Hold Align Technology (ALGN) Now
Align Technology, Inc. (ALGN - Free Report) has been gaining from Invisalign portfolio expansion. ALGN’s slew of strategic alliances looks impressive. However, economic uncertainty and stiff competition raise apprehension.
In the past year, this Zacks Rank #3 (Hold) stock has gained 32.1% compared with 19.8% growth of the industry and a 15.9% rise of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $25.22 billion. Its expected long-term earnings growth rate of 17.2% is ahead of the industry’s anticipation of 12.2%.
Let’s delve deeper.
Growth Drivers
Invisalign Portfolio Expansion: Align Technology’s Invisalign portfolio offers orthodontic treatment to straighten teeth without metal braces.
During first quarter, ALGN launched Invisalign Comprehensive three and three product in most markets. Instead of unlimited additional aligners within five years of the treatment end date, this latest configuration offers Invisalign comprehensive treatment with three additional aligners included within three years of treatment end date.
The initial adoption of the product garnered a positive response. Management expects that its impact will be more meaningful and provide doctors with desired flexibility. Further, this will allow the company to recognize deferred revenues over a shorter period of time compared with the traditional Invisalign comprehensive product.
Strategic Alliances: Align Technology's slew of strategic alliances looks promising. It has well-established relationships with many DSOs, especially in the United States, and is continuously exploring collaboration with others that drive adoption of digital dentistry. Recently, it announced a $75 million equity investment in Heartland Dental.
During first quarter, ALGN delivered 7.8 billion impressions and had 22.1 million visits to its websites. IT continues to invest in top media platforms such as TikTok, Snapchat, Instagram and YouTube across markets.
iTero in Focus: Align Technology has been focusing on expanding work-flow options of its leading iTero scanners. In first quarter, services revenues increased year over year. This was primarily driven by higher subscription revenues resulting from large number of iTero scanners in the field. The company also had higher non-systems revenues reflecting increased scanner rentals, upgrades and certified pre-owned or CPO leasing programs.
Earlier in 2022, the company announced a strategic collaboration with Desktop Metal to supply iTero Element Flex scanners to Desktop Labs. The iTero Element Flex is now the preferred restorative scanner for Desktop Labs and will connect dentists directly with a suite of offerings from Desktop Labs.
Downsides
Competitive Landscape: Align Technology faces significant competition from traditional orthodontic appliance (or wires and brackets) players such as 3M’s Unitek, Danaher Corporation’s Sybron Dental Specialties and Dentsply International. It also competes with productions similar to Invisalign Technology, such as products from Ormco Orthodontics, a division of Sybron Dental Specialties.
Economic Uncertainty: The general slowdown in the United States and certain international economies is having a negative impact on consumer spending and affecting Align Technology’s business fundamentals. ALGN attributed the waning earnings to this macroeconomic crisis that affected the overall dental market and led to continued soft dental sales of the company. Dental procedures are primarily elective in nature and are deferred when unemployment levels rise.
Estimate Trend
In the past 90 days, the Zacks Consensus Estimate for Align Technology’s 2023 earnings has moved 4.1% north to $8.31 per share.
The Zacks Consensus Estimate for ALGN’s 2023 revenues is pegged at $3.89 billion, suggesting a 4.2% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , HealthEquity, Inc. (HQY - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%.
Hologic has gained 15.4% compared with the industry’s 12.5% growth in the past year.
HealthEquity, currently sporting a Zacks Rank #1 (Strong Buy), has an expected long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
HealthEquity has improved 9% against the industry’s 16.2% decline in the past year.
Boston Scientific, presently carrying a Zacks Rank #2, has an anticipated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed twice, the average surprise being 1.9%.
Boston Scientific has risen 39.4% against the industry’s 22.1% decline in the past year.