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Here's Why You Should Buy Align Technology (ALGN) Stock Now
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Align Technologies (ALGN - Free Report) is likely to grow in the coming quarters, backed by its impressive strategic alliances. Over the past couple of years, the company has successfully launched its first subscription-based clear aligner program, the Doctor Subscription Program (“DSP”), worldwide. A strong solvent balance sheet appears highly promising.
However, the substantial dependence on the Invisalign system and currency fluctuations remain a concern for ALGN.
In the past year, this Zacks Rank #3 (Hold) stock has increased 13.3% compared with the 9.4% rise of the industry and 20.9% growth of the S&P 500 composite.
The renowned medical device company has a market capitalization of $20.8 billion. ALGN projects a long-term estimated earnings growth rate of 17.5% compared with 11.9% of the industry. In the trailing four quarters, the company delivered an earnings surprise of 6.5%.
Let’s delve deeper.
Upsides
Invisalign Portfolio Expansion: Align Technology’s Invisalign portfolio offers orthodontic treatment to straighten teeth without metal braces. The company introduced DSP in the United States and Canada in 2021 and expanded it to Spain and the Nordic countries in the second quarter of 2023. Align Technology launched a new doctor-enabled direct ship-to-patient feature in its Vivera Retainer Subscription platform, which is part of the broader DSP in the United States and Canada.
Image Source: Zacks Investment Research
Further, in the third quarter of 2023, the company successfully continued to roll out the Invisalign Comprehensive Three and Three product in the APAC, where it is now available in China, Hong Kong, Korea, Taiwan and India. The product will allow Align Technology to recognize deferred revenues over a shorter period of time compared to the traditional Invisalign comprehensive product. Align Technology also launched the Invisalign Palatal Expander System, an advanced direct 3D printed device based on a proprietary and patented technology.
Strategic Alliances: Align Technology's slew of strategic alliances looks impressive. In the Americas, the company aimed to reach young adults as well as teens and their parents through influencer and creator-centric campaigns, partnering with leading smile squad creators, including Marshall Martin, Rally Shaw and Jeremy Lin.
In the United States, the company is working closely with Athletes Over Time, a high school sports social media platform that showcases the benefits of Invisalign treatment. In the EMEA region, ALGN has partnered with new influencers to reach consumers across social media platforms, including TikTok and Meta. In Germany, Align Technology launched new testimonial campaigns highlighting the stories of 70 young adults and teens who share why they chose Invisalign treatment and how it impacted their lives.
Strong Solvency, Attractive Returns to Investors: With no debt on its balance sheet, Align Technology looks quite comfortable from the liquidity point of view. The company’s cash, cash equivalents cash, and short-term marketable securities of $1.28 billion at the end of the third quarter of 2023 compared favorably with $$1.01 billion at the end of the second quarter.
The company also generated strong cash flow and returned wealth to investors through share buybacks. During the fourth quarter, the company expects to repurchase up to $250 million of common stock through either a combination of open market repurchases or an accelerated stock repurchase agreement.
Downsides
Overdependence on the Invisalign Technology System: The bulk of Align Technology's net revenues largely depends on the sale of its Invisalign Technology System, primarily Invisalign Technology Full and Invisalign Technology Teen. Therefore, the continued and widespread market acceptance of Invisalign Technology by orthodontists, GPs and consumers is critical to Align Technology’s future success. Management fears that if consumers start preferring a competitive product over Invisalign, the company’s operating results will suffer.
Currency Headwinds: Through the first nine months of 2023, the strengthening of the U.S. dollar against nearly every other major currency hampered Align Technology’s revenues in international markets. This was mainly due to the Fed’s 10 consecutive aggressive hikes in interest rates to tackle inflation since March 2022. During the third quarter, the unfavorable effect of foreign exchange reduced revenues and margins significantly for Align Technology.
Estimate Trend
The Zacks Consensus Estimate for Align Technologies’ 2023 earnings per share (EPS) has decreased from $8.39 to $8.36 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at 3.86 billion. This suggests a 3.3% rise from the year-ago reported number.
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.3%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 3.2% compared to the industry’s 0.3% rise in the past year.
DaVita, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 17.3% compared with the industry’s 11.3%. Shares of the company have increased 36.6% compared with the industry’s 9% rise over the past year.
DVA’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 27.5% compared with the industry’s 13.9%. Shares of HQY have increased 20.9% against the industry’s 8.2% decline over the past year.
HQY’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 16.5%. In the last reported quarter, it delivered an average earnings surprise of 22.5%.
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Here's Why You Should Buy Align Technology (ALGN) Stock Now
Align Technologies (ALGN - Free Report) is likely to grow in the coming quarters, backed by its impressive strategic alliances. Over the past couple of years, the company has successfully launched its first subscription-based clear aligner program, the Doctor Subscription Program (“DSP”), worldwide. A strong solvent balance sheet appears highly promising.
However, the substantial dependence on the Invisalign system and currency fluctuations remain a concern for ALGN.
In the past year, this Zacks Rank #3 (Hold) stock has increased 13.3% compared with the 9.4% rise of the industry and 20.9% growth of the S&P 500 composite.
The renowned medical device company has a market capitalization of $20.8 billion. ALGN projects a long-term estimated earnings growth rate of 17.5% compared with 11.9% of the industry. In the trailing four quarters, the company delivered an earnings surprise of 6.5%.
Let’s delve deeper.
Upsides
Invisalign Portfolio Expansion: Align Technology’s Invisalign portfolio offers orthodontic treatment to straighten teeth without metal braces. The company introduced DSP in the United States and Canada in 2021 and expanded it to Spain and the Nordic countries in the second quarter of 2023. Align Technology launched a new doctor-enabled direct ship-to-patient feature in its Vivera Retainer Subscription platform, which is part of the broader DSP in the United States and Canada.
Image Source: Zacks Investment Research
Further, in the third quarter of 2023, the company successfully continued to roll out the Invisalign Comprehensive Three and Three product in the APAC, where it is now available in China, Hong Kong, Korea, Taiwan and India. The product will allow Align Technology to recognize deferred revenues over a shorter period of time compared to the traditional Invisalign comprehensive product. Align Technology also launched the Invisalign Palatal Expander System, an advanced direct 3D printed device based on a proprietary and patented technology.
Strategic Alliances: Align Technology's slew of strategic alliances looks impressive. In the Americas, the company aimed to reach young adults as well as teens and their parents through influencer and creator-centric campaigns, partnering with leading smile squad creators, including Marshall Martin, Rally Shaw and Jeremy Lin.
In the United States, the company is working closely with Athletes Over Time, a high school sports social media platform that showcases the benefits of Invisalign treatment. In the EMEA region, ALGN has partnered with new influencers to reach consumers across social media platforms, including TikTok and Meta. In Germany, Align Technology launched new testimonial campaigns highlighting the stories of 70 young adults and teens who share why they chose Invisalign treatment and how it impacted their lives.
Strong Solvency, Attractive Returns to Investors: With no debt on its balance sheet, Align Technology looks quite comfortable from the liquidity point of view. The company’s cash, cash equivalents cash, and short-term marketable securities of $1.28 billion at the end of the third quarter of 2023 compared favorably with $$1.01 billion at the end of the second quarter.
The company also generated strong cash flow and returned wealth to investors through share buybacks. During the fourth quarter, the company expects to repurchase up to $250 million of common stock through either a combination of open market repurchases or an accelerated stock repurchase agreement.
Downsides
Overdependence on the Invisalign Technology System: The bulk of Align Technology's net revenues largely depends on the sale of its Invisalign Technology System, primarily Invisalign Technology Full and Invisalign Technology Teen. Therefore, the continued and widespread market acceptance of Invisalign Technology by orthodontists, GPs and consumers is critical to Align Technology’s future success. Management fears that if consumers start preferring a competitive product over Invisalign, the company’s operating results will suffer.
Currency Headwinds: Through the first nine months of 2023, the strengthening of the U.S. dollar against nearly every other major currency hampered Align Technology’s revenues in international markets. This was mainly due to the Fed’s 10 consecutive aggressive hikes in interest rates to tackle inflation since March 2022. During the third quarter, the unfavorable effect of foreign exchange reduced revenues and margins significantly for Align Technology.
Estimate Trend
The Zacks Consensus Estimate for Align Technologies’ 2023 earnings per share (EPS) has decreased from $8.39 to $8.36 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at 3.86 billion. This suggests a 3.3% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , DaVita (DVA - Free Report) and HealthEquity (HQY - Free Report) .
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.3%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 3.2% compared to the industry’s 0.3% rise in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 17.3% compared with the industry’s 11.3%. Shares of the company have increased 36.6% compared with the industry’s 9% rise over the past year.
DVA’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 27.5% compared with the industry’s 13.9%. Shares of HQY have increased 20.9% against the industry’s 8.2% decline over the past year.
HQY’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 16.5%. In the last reported quarter, it delivered an average earnings surprise of 22.5%.