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PROPERTY:

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Here's Why You Should Buy Align Technology (ALGN) Stock Now

Zacks Equity Research

Align Technology, Inc. ALGN has been gaining from several sales-building efforts (including a product launch in China), partnerships and robust segmental growth. The company has also been enhancing focus on international markets. Further, its Invisalign portfolio continues to perform well in the Asia Pacific and Latin America, whereas its orthodontics channel is progressing well in the North American markets on steady customer adoption.

Over the past year, shares of the Zacks Rank #2 (Buy) stock have outperformed its industry. The stock has gained 47.7% compared with 4.6% growth of its industry. Also, the company has outperformed the S&P 500’s 25.7% rally during the same period.

The renowned medical device provider specializes in clear aligner therapy, intra-oral scanners, and CAD/CAM (computer-aided design and computer-aided manufacturing) digital services used in dentistry, orthodontics and dental records storage. It has a market capitalization of $22 billion. The company projects 22.1% growth for the next five years and expects to maintain its strong segmental performance. Further, it delivered a positive earnings surprise of 11%, on average, over the trailing four quarters.


Per our Style Score, Align Technology has a Growth Score of A, which is reflective of its solid prospects. Our research shows that stocks with the combination of a Growth Style Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.

Factors That Make the Stock an Attractive Pick

Q3 Results: We are upbeat about Align Technology’s third-quarter performance. The company’s quarterly performance was robust, with better-than-expected revenues. Both of its segments witnessed year-over-year improvements in revenues. The upside was primarily driven by continued adoption by teenage and younger patients as well as increased utilization among orthodontists and expansion of the company’s global customer base. The Americas and International regions witnessed a solid uptick.

Product Portfolio: We are upbeat about Align Technology’s launch of the Invisalign First clear aligners for treating younger patients with early mixed dentition in the United States, Australia, New Zealand, Japan and the EMEA. Further, the Invisalign treatment, with mandibular advancement (another offering of the company), has been expanding quite impressively, leading to an expanding customer base.

Align Technology commercially launched the iTero Element 2 scanner in China, with the first iTero Element 2 produced in its manufacturing facility in Ziyang. The company is also optimistic about its collaboration with Zimmer Biomet Dental for the iTero Element suite of intra-oral scanners.

International Business: Align Technology’s international Invisalign Technology volumes were up 32.1% year over year in the third quarter of 2019, reflecting continued strength in both EMEA and APAC regions. Within APAC, Invisalign volume surged year over year, fueled by strength in greater China and Japan markets. The company expects the momentum to continue in the fourth quarter as well.

Estimate Trend

Align Technology is witnessing a positive estimate revision trend for the current year. Over the past 60 days, the Zacks Consensus Estimate for its earnings has moved 1.1% north to $5.39.

The Zacks Consensus Estimate for the company’s fourth-quarter 2019 revenues is pegged at $655.7 million, suggesting a 19.4% rise from the year-ago reported number.

Other Key Picks

Some other top-ranked stocks from the broader medical space are Haemonetics Corporation HAE, Medtronic plc MDT and Vapotherm, Inc VAPO.

Haemonetics, currently carrying a Zacks Rank #2, has a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Medtronic’s long-term earnings growth rate is estimated at 7.4%. The company currently carries a Zacks Rank #2.

Vapotherm’s long-term earnings growth rate is estimated at 49.5%. It currently carries a Zacks Rank #2.

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Medtronic PLC (MDT) : Free Stock Analysis Report
 
Haemonetics Corporation (HAE) : Free Stock Analysis Report
 
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
 
Vapotherm, Inc. (VAPO) : Free Stock Analysis Report
 
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Zacks Investment Research