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ALGN Gears Up for Q3 Earnings: What Lies Ahead for the Stock?

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Align Technology, Inc. (ALGN - Free Report) is set to release third-quarter 2024 results on Oct. 23, after the closing bell.

In the last reported quarter, the company posted adjusted earnings per share (EPS) of $2.41, which topped the Zacks Consensus Estimate by 3.9%. Align Technology beat on earnings in three of the trailing four quarters and missed in one, the average surprise being 4.42%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

ALGN’s Q3 Estimates

The Zacks Consensus Estimate for revenues is pegged at $989.9 million, suggesting growth of 3.1% from the year-ago reported figure.

The Zacks Consensus Estimate for earnings is pinned at $2.31 per share, indicating a 7.9% improvement from the year-ago recorded actuals.

Estimate Revision Trend Ahead of ALGN’s Q3 Earnings

Estimates for Align Technology’s third-quarter earnings have moved down marginally 0.1% to $9.37 per share in the past 30 days.

Let's take a look at how things might have shaped up for the MedTech major prior to the announcement.

Factors at Play

Clear Aligner Business

Similar to the last reported quarter, Align Technology is likely to have witnessed strength in Clear Aligner volumes for teens and adult patients. It is also expected to have registered continued growth from Invisalign Doctor Subscription Program (DSP) touch-up cases. During the second quarter earnings call, the company noted that it expects to expand DSP into other country markets in Europe soon. If successfully executed, this too might have favorably contributed to ALGN’s Clear Aligner business in the quarter under review.

In the second quarter, Clear Aligner Average Selling Prices (ASP) were down sequentially due to the greater impact of unfavorable foreign exchange across multiple currencies, especially the Japanese yen, Euro and Brazilian real, as well as discounts and a product mix shift to lower ASP products. This might have hurt the company’s to-be-reported quarter’s top line.

In the third quarter, non-case revenues might have witnessed a year-over-year increase owing to the sustained growth of Vivera retainers.

During the second quarter, adult patient cases were up sequentially, reflecting the highest number of adult shipments in eight quarters. Also, the Invisalign Palatal Expander System received immense positive feedback. The company is pleased with the continued adoption of Invisalign Comprehensive three and three products and anticipates that the adoption will continue to increase with availability in North America, EMEA and certain markets across APAC. These factors, too, might have aided Align Technology’s third-quarter revenues.

Align Technology, Inc. Price and EPS Surprise

Imaging Systems & CAD/CAM Service Business

In the third quarter, the Systems & Services business is projected to have witnessed growth, owing to high scanner volumes, increased scanner ASPs and improved non-system revenues driven by iTero Lumina wand upgrades. The continuous uptake of the iTero Lumina Scanner with ortho workflow and positive response from customers are likely to have boosted the company’s third-quarter revenues.

During the quarter under review, Align Technology introduced the iTero Design Suite, offering doctors an intuitive way to facilitate designs for 3D printing of models, bite splints, and restore restorations and practice. The company is developing new capital equipment opportunities to meet the digital transformation needs of its customers and DSO partners. This is a natural progression for ALGN’s equipment business, with a large and growing base of scanners sold. We expect these developments to have positively impacted the company’s third-quarter top line.

What Our Quantitative Model Predicts for ALGN

Per our proven model, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold), along with a positive Earnings ESP, have a higher chance of beating on earnings. However, that is not the case here, as you can see below:

Earnings ESP: Align Technologies has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #4.

Stocks Worth a Look

Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this reporting cycle.

DiaMedica Therapeutics (DMAC - Free Report) has an Earnings ESP of +10.35% and a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is expected to release third-quarter 2024 results on Nov. 11. DMAC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 11.39%.

RadNet (RDNT - Free Report) has an Earnings ESP of +20.00% and a Zacks Rank #2 at present. The company is expected to release third-quarter 2024 results on Nov. 13.

RDNT’s earnings surpassed estimates in three of the trailing four quarters and broke even once, the average surprise being 98.23%. The Zacks Consensus Estimate for RadNet’s third-quarter EPS is expected to increase 21.4% from the year-ago quarter's reported numbers.

TransMedics Group (TMDX - Free Report) has an Earnings ESP of +26.63% and a Zacks Rank #3 at present. The company is likely to release third-quarter 2024 results on Nov. 4. The Zacks Consensus Estimate for the company’s third-quarter EPS implies a surge of 333.3% from the year-ago quarter’s reported figure.

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