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Tempe, Arizona-based Align Technology, Inc. (ALGN) designs, manufactures, and markets Invisalign clear aligners, and iTero intraoral scanners and services for orthodontists and general practitioner dentists. With a market cap of $17.1 billion, Align’s operations span over 90 countries and the company has served over 18 million customers worldwide.
The MedTech major has underperformed the broader market over the past year. ALGN stock has plunged 16.2% in 2024 and gained around 6% over the past year, lagging behind the S&P 500 Index’s ($SPX) surge of 25.8% on a YTD basis and 31.8% over the past 52 weeks.
Zooming in further, ALGN has also underperformed the SPDR S&P Health Care Equipment ETF’s (XHE) 11.3% gains in 2024 and 25% returns over the past year.
ALGN stock rose 4.2% after the release of its Q3 earnings on Oct. 23 as the company announced its plan to repurchase up to $275 million worth of equity shares from the start of Q4, demonstrating the company's confidence in its valuation and boosting investor confidence. Moreover, the company also reported a robust growth in profitability, with its adjusted EPS growing 9.8% year-over-year to $2.35.
However, its total revenues grew by a modest 1.8% year-over-year to $977.9 million, which missed analysts' estimates as the company observed more pronounced seasonality for clear aligners than expected, and the U S. dental market continued to observe weak consumer sentiment which led to lower-than-expected revenues. Additionally, compared to Q2 results, the company has observed a 4.9% decline in revenues and a 2.5% decline in adjusted EPS.
For the current year, ending in December, analysts expect ALGN to report a 13.1% year-over-year growth in adjusted EPS to $7.45. The company’s earnings surprise history is mixed. It surpassed analysts’ earnings estimates in two of the past four quarters while missing on two other occasions.
ALGN stock has a consensus “Moderate Buy” rating overall. Among the 11 analysts covering the stock, six advise “Strong Buy,” one suggests “Moderate Buy,” three recommend “Hold,” and one advocates a “Moderate Sell” rating.
On Oct. 24, Morgan Stanley (MS) analyst Erin Wright maintained an “Overweight” rating while adjusting the price target to $280, indicating a 21.9% upside potential from current price levels.
ALGN’s mean price target of $265.60 suggests a 15.6% upside potential. The Street-high price target of $320 represents a staggering 39.3% premium to current price levels.
