Back to top

Image: Bigstock

Smile Direct Club (SDC): The Comeback Story

Read MoreHide Full Article

Smile Direct Club has been a wild ride for investors since the company went public in mid-September and is finally on the upswing. Below you can see SDC’s progression since its IPO.

SDC started off on a rocky note. Its first day on the public markets demonstrated the worst IPO in decades, with traders pushing this stock down 27.5% day one. The stock then proceed to break down to just a fraction of its IPO price, with the primary catalyst being legal concerns. The fundamentals of the business remained strong, and all it took was some positive news to push SDC shares right back towards their IPO price.

In the 2 weeks of 2020, SDC shares have appreciated over 60% in value due to a couple of critical announcements. Smile Direct Club announced that it would be partnering with Walmart to sell some of its supplementary products on January 6th. Investors and traders pushed the stock price up over 20% initially after the news but then traced back down.

On January 14th, news was released that SDC would now be selling its aligners to orthodontists. This was the catalyst that was needed to propel these shares towards analysts’ target price. Analysts have been calling this a buy for months now, and the stock is finally making its way towards the $20 average price target that analysts have set for it.

Since Tuesday (January 14th), Smile Direct Club’s stock price has rallied 35%, and its primary competitor, Align Technology (ALGN - Free Report) , has dropped over 5%. Selling its products to orthodontists significantly broadening SDC’s reach into a much more legitimate realm, and now poses a more substantial risk to Align Technology’s clear aligner. Having real orthodontists using Smile Direct’s aligners gives this product validity for those wanting to try its direct-to-consumer channel.

The Business

This company is a driving force in the next era of medical treatment, where ease and convenience are the underlying stimulus. Millennials and Gen Z’s value appearance with social media making all your images are worth a thousand words. SDC offers consumers a more convenient and cheaper option to straighten out your smile compared to traditional orthodontists.

Take Away

Zacks Ranking is putting SDC at a #4 (Sell) right now, but once analysts have adjusted their models for this most recent news, this ranking should be pushed up. The markets have smothered SDC since its IPO. I don’t think that these shares recent rally is over. If the broader market can stay afloat, I am confident that SDC has legs to run.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Align Technology, Inc. (ALGN) - free report >>

Published in