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What's in Store for Align Technology's (ALGN) Q3 Earnings?

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Align Technology, Inc. (ALGN - Free Report) is set to report third-quarter 2019 results on Oct 23, after the closing bell.

In the last reported quarter, the company delivered a positive earnings surprise of 21.2%. It has a four-quarter average positive earnings surprise of 9%.

Let’s take a look at how things are shaping up prior to this announcement.

Key Catalysts

Invisalign System

Align Technology is expected to have gained from continued adoption of Invisalign system in the third quarter of 2019.

Invisalign portfolio expansion, anticipated revenue growth at the Clear Aligner segment on sustained Invisalign case volume growth across customer channels and geographies, and estimated growth in the teen patient segment are likely to aid the company’s results. We believe Invisalign First, Invisalign Lite, Invisalign Go and treatment with Mandibular Advancement have seen continued strength in the third quarter as well.

For the Americas, the company expects third-quarter Invisalign volumes to show sequential increase on growth in orthodontist and GP channels as well as continued uptick in the number of teenage patient cases.

Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote

For International markets, management expects third-quarter volumes to reflect sequential growth, mirroring seasonally stronger periods for the EMEA and APAC regions. For the to-be-reported quarter, the company anticipates strong Invisalign volume growth, particularly in China, Japan, Hong Kong and Taiwan. In Latin America, Align Technology’s continued investments in the Clear Aligner segment should get reflected in the company’s Invisalign volume growth in this geography.

Scanner & Service Business to Drive Q3

Align Technology has been generating solid revenues from the Scanner and Service business over the past few quarters. The company has been witnessing increased adoption of iTero scanners for Invisalign case submissions, especially in North America and the Asia-Pacific region. We expect this trend to get reflected in third-quarter results.

Continued adoption of the iTero Element 5D imaging system in EMEA, APAC and Canada is expected to have contributed to the company’s top line.

Which Way Are Estimates Treading?

The Zacks Consensus Estimate for revenues is pegged at $592.5 million, indicating an improvement of 17.3% from the year-ago figure. The same for earnings per share is pinned at $1.14, suggesting a decline of 8.1%.

Q3 Guidance

For the third quarter of 2019, the company projects revenues of $585-600 million (indicating 16-19% growth from a year ago). Operating margin for the quarter is estimated in the band of 19.8-20.5%. Further, continuation of the company’s operational expansion efforts might have resulted in third-quarter capital expenditure of $50-$55 million.

Earnings Whispers

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. This is not the case here as you will see below.

Earnings ESP: Align Technology 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: Align Technology carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1  Rank stocks here.

Stocks Worth a Look

Here are a few medical stocks worth considering from the same space with the right mix of elements to surpass expectations this earnings season.        

Akcea Therapeutics (AKCA - Free Report)  has an Earnings ESP of +18.18% and a Zacks Rank of 2.

Vertex Pharmaceuticals (VRTX - Free Report) has an Earnings ESP of +2.28% and a Zacks Rank #1.

DENTSPLY SIRONA (XRAY - Free Report) has an Earnings ESP of +5.05% and a Zacks Rank of 3.

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