Thursday, Align Technology (NASDAQ:ALGN) received a positive assessment from Baird, as the firm raised its price target on the stock to $370 from $333. The rating remains at Outperform. The adjustment follows Align's first-quarter case volumes that ended approximately 150 basis points above the Street's expectations and around 100 basis points above the whisper number, marking a 2.4% year-over-year increase.
The company's operating margin percentage also exceeded expectations by 130 basis points. Additionally, Align Technology has provided an updated revenue guidance for 2024, projecting a year-over-year increase of 6-8%. This updated guidance comes after the company reported a 6% year-over-year revenue growth in the first quarter.
The analyst from Baird noted that the improved revenue guidance is likely to be received positively, especially considering the uncertainties surrounding consumer spending and orthodontic demand in March. Despite limited visibility over the next few quarters due to macroeconomic factors, Baird highlighted that Align's consistency is showing signs of improvement, with trailing twelve months revenue growth at 6%.
The valuation of Align Technology was also mentioned as reasonable by the analyst, with the stock trading at approximately 21 times the next twelve months' estimated EBITDA. This valuation, coupled with the company's performance, supports Baird's decision to maintain its Outperform rating on the stock. The new price target of $370 represents a $37 increase from the previous target.
InvestingPro Insights
Align Technology (NASDAQ:ALGN) is currently navigating the market with a robust financial posture, as evidenced by InvestingPro data. With a market capitalization of $23.61 billion and a high Price to Earnings (P/E) ratio of 53.92, the company showcases its significant market valuation. The P/E ratio, when adjusted for the last twelve months as of Q1 2024, stands at a slightly lower figure of 50.06, indicating a premium that investors are willing to pay for its earnings. Moreover, the company's revenue has grown by 5.72% over the last twelve months, reflecting a steady upward trajectory in its financial performance.
InvestingPro Tips highlight that Align Technology has been aggressively buying back shares, which can be an indicator of management's confidence in the company's future prospects. Additionally, the company is recognized for operating with a moderate level of debt, which may provide it with financial flexibility. Analysts predict that the company will be profitable this year, and it has been profitable over the last twelve months. This is underscored by a strong return over the last three months, with a 19.71% price total return, signaling investor optimism.
For readers looking to delve deeper into Align Technology's financial nuances, more InvestingPro Tips can be found at https://www.investing.com/pro/ALGN. There are 11 additional tips available to assist in making informed decisions, and by using the coupon code PRONEWS24, you can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. These insights can provide a comprehensive understanding of the company's valuation and performance metrics, as well as future profitability expectations.
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