Align Technology Reports Mixed Earnings, Stock Sees Potential Upside

Align Technology faced mixed financial results with modest revenue growth, yet positive adjusted EPS. Analysts maintain a moderately optimistic view, while stock prices may see fluctuations due to contrasting performance in earnings and revenue expectations, as detailed in the report.

Date: 29-11-2024

AI Rating: 6

Align Technology, Inc. (ALGN), known for its Invisalign clear aligners, is experiencing a volatile stock performance. The report indicates that ALGN has seen a year-to-date drop of 16.2% in 2024, contrasting with the S&P 500's impressive 25.8% increase.

Despite the struggles, one of the bright spots is the growth in adjusted Earnings Per Share (EPS), which increased by 9.8% year-over-year to $2.35. This figure is significantly positive as it showcases the company's ability to maximize earnings compared to the previous year, thereby indicating operational improvements or cost efficiencies.

However, revenue figures reveal potential concerns. Total revenues rose just 1.8% to $977.9 million, which fell short of analyst expectations. The underperformance may stem from a combination of weaker consumer sentiment in the U.S. dental market and increased seasonality affecting clear aligner sales. Additionally, there was a 4.9% drop in revenues compared to Q2, reflecting a concerning trend.

Moreover, the report indicates that ALGN's future earnings outlook for the end of this year suggests an expected growth in adjusted EPS by 13.1% to $7.45. However, its mixed earnings surprise history—missing analysts’ estimates in half of the last four quarters—might lead to cautious sentiment among investors.

Despite the challenges, the report notes that ALGN carries a consensus “Moderate Buy” rating from analysts, with some expressing a stronger buy sentiment. The adjustment of the price targets reveals a notable upside potential, with the mean price target at $265.60 suggesting a 15.6% expected rise, and the Street-high being as optimistic as $320, representing a 39.3% potential upside.

Stocks: ALGN MS