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Align (ALGN) Ailed by Macroeconomic Issues & Currency Headwind
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Align Technology’s (ALGN - Free Report) macroeconomic issues and currency headwinds continue to dent growth. The stock carries a Zacks Rank #4 (Sell).
Align Technology is suffering from the ongoing industry-wide trend of staffing shortages and supply chain-related hazards. Deteriorating international trade, with global inflationary pressure leading to a tough situation related to raw material and labor costs, as well as freight charges and rising interest rates, all have put the dental treatment space (which is highly elective) in a tight spot.
Added to this, ALGN is also concerned about the military conflict between Russia and Ukraine. The company noted that while it continues to employ research and development personnel in Russia as well as limited post-sales support and administrative personnel, its total number of employees in Russia was materially reduced in 2022.
Further, Align Technology anticipates increasing headwinds from macroeconomic uncertainty and potential supply issues related to the war in the Middle East in the upcoming period. The company expects its fourth-quarter 2023 GAAP operating margin to be down sequentially from the third quarter of 2023 due to restructuring primarily related to severance as the company adjusts the headcount for this environment.
Foreign exchange is a major headwind for Align Technology due to a considerable percentage of its revenues coming from outside the United States (in 2022, 44% of the company’s consolidated revenues came from international regions). 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 the international markets. This was mainly due to the Fed’s 10 consecutive aggressive hikes in interest rates to tackle inflation since March 2022.
Added to this, 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. The company also competes with products similar to Invisalign Technology, such as products from Ormco Orthodontics, a division of Sybron Dental Specialties.
Over the past year, shares of Align Technology have risen 5.4% compared with the industry’s 10.8% increase.
On a positive note, Align Technology is strategically capturing the growing malocclusion market, one of the most prevalent clinical dental conditions in the world. According to ALGN’s May 2023 data, it is currently affecting approximately 60% to 75% of the global population. The company estimates that there are approximately 500 million people globally with malocclusion. However, most of them do not seek orthodontic treatment, mainly due to negative perceptions of metal braces, affordability of treatment and accessibility to doctors in certain markets and geographies.
In terms of portfolio expansion, over the past couple of years, the company has successfully launched its first subscription-based clear aligner program, the Doctor Subscription Program (“DSP”), worldwide. 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.
Further, Align Technology has plans to launch DSP in France and the United Kingdom in the second half of 2023. Meanwhile, in the third quarter of 2023, Align Technology launched a new doctor-enabled direct ship-to-patient feature on its Vivera Retainer Subscription (“VRS”) platform. The VRS platform is part of Align Technology’s broader DSP in the United States and Canada.
Align Technology is expanding its sales and marketing by reaching new countries and regions, including new areas within Africa and Latin America. By the end of 2022, the company sold directly or through authorized distributors in more than 100 countries. With the opening of its third clear aligner fabrication facility in Wroclaw, Poland, ALGN now has a manufacturing facility in each of its operating territories — the Americas (Mexico), the APAC (China) and the EMEA (Poland).
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 each of the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 6.5% compared with the industry’s 6.5% fall in the past year.
DaVita, carrying a Zacks Rank #2 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 35.3% compared with the industry’s 8.8% growth over the past year.
DVA’s earnings surpassed estimates in each of 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 31.2% against the industry’s 6% decline over the past year.
HQY’s earnings surpassed estimates in each of 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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Align (ALGN) Ailed by Macroeconomic Issues & Currency Headwind
Align Technology’s (ALGN - Free Report) macroeconomic issues and currency headwinds continue to dent growth. The stock carries a Zacks Rank #4 (Sell).
Align Technology is suffering from the ongoing industry-wide trend of staffing shortages and supply chain-related hazards. Deteriorating international trade, with global inflationary pressure leading to a tough situation related to raw material and labor costs, as well as freight charges and rising interest rates, all have put the dental treatment space (which is highly elective) in a tight spot.
Added to this, ALGN is also concerned about the military conflict between Russia and Ukraine. The company noted that while it continues to employ research and development personnel in Russia as well as limited post-sales support and administrative personnel, its total number of employees in Russia was materially reduced in 2022.
Further, Align Technology anticipates increasing headwinds from macroeconomic uncertainty and potential supply issues related to the war in the Middle East in the upcoming period. The company expects its fourth-quarter 2023 GAAP operating margin to be down sequentially from the third quarter of 2023 due to restructuring primarily related to severance as the company adjusts the headcount for this environment.
Align Technology, Inc. Price
Align Technology, Inc. price | Align Technology, Inc. Quote
Foreign exchange is a major headwind for Align Technology due to a considerable percentage of its revenues coming from outside the United States (in 2022, 44% of the company’s consolidated revenues came from international regions). 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 the international markets. This was mainly due to the Fed’s 10 consecutive aggressive hikes in interest rates to tackle inflation since March 2022.
Added to this, 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. The company also competes with products similar to Invisalign Technology, such as products from Ormco Orthodontics, a division of Sybron Dental Specialties.
Over the past year, shares of Align Technology have risen 5.4% compared with the industry’s 10.8% increase.
On a positive note, Align Technology is strategically capturing the growing malocclusion market, one of the most prevalent clinical dental conditions in the world. According to ALGN’s May 2023 data, it is currently affecting approximately 60% to 75% of the global population. The company estimates that there are approximately 500 million people globally with malocclusion. However, most of them do not seek orthodontic treatment, mainly due to negative perceptions of metal braces, affordability of treatment and accessibility to doctors in certain markets and geographies.
In terms of portfolio expansion, over the past couple of years, the company has successfully launched its first subscription-based clear aligner program, the Doctor Subscription Program (“DSP”), worldwide. 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.
Further, Align Technology has plans to launch DSP in France and the United Kingdom in the second half of 2023. Meanwhile, in the third quarter of 2023, Align Technology launched a new doctor-enabled direct ship-to-patient feature on its Vivera Retainer Subscription (“VRS”) platform. The VRS platform is part of Align Technology’s broader DSP in the United States and Canada.
Align Technology is expanding its sales and marketing by reaching new countries and regions, including new areas within Africa and Latin America. By the end of 2022, the company sold directly or through authorized distributors in more than 100 countries. With the opening of its third clear aligner fabrication facility in Wroclaw, Poland, ALGN now has a manufacturing facility in each of its operating territories — the Americas (Mexico), the APAC (China) and the EMEA (Poland).
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 each of the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 6.5% compared with the industry’s 6.5% fall 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, carrying a Zacks Rank #2 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 35.3% compared with the industry’s 8.8% growth over the past year.
DVA’s earnings surpassed estimates in each of 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 31.2% against the industry’s 6% decline over the past year.
HQY’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.5%. In the last reported quarter, it delivered an average earnings surprise of 22.5%.