On Thursday, Piper Sandler adjusted its outlook on Align Technology (NASDAQ:ALGN) shares, reducing the price target to $285 from the previous $315. The firm retained its Overweight rating on the stock.
This decision follows a reported 4% year-over-year decline in September clear aligner case volumes, which contributed to a marginal 0.5% drop in third-quarter U.S. orthodontic case volumes according to Piper Sandler's data.
The latest figures are consistent with the year-over-year performance observed over the past few months, aligning with third-quarter projections for the U.S. market.
The analysis of the third-quarter performance indicated a contrast between different age demographics. Teen case volumes experienced a significant 8.5% year-over-year decrease, underperforming compared to adults. In contrast, adult demand showed signs of recovery, supporting recent feedback from a large Dental Service Organization (DSO) that reported a strong September for adult patients.
Despite the adjustments in case volumes, Piper Sandler expressed a positive stance on the current share price levels for Align Technology, suggesting they present a good entry point for investors.
The firm's analyst believes that third-quarter results are unlikely to disappoint compared to consensus expectations and that estimates for the year 2025 will be adjusted to more realistic figures, potentially making the stock more attractive for long-term investors.
In summary, Piper Sandler's revised price target reflects recent data on case volumes but maintains an optimistic view on Align Technology's market position and the potential for future growth. The firm anticipates that the recalibration of market estimates will create a favorable environment for investors looking to engage with the stock.
In other recent news, Align Technology has been the subject of various analyst reports. Piper Sandler has adjusted its price target for the company to $285, maintaining an Overweight rating. This comes after a reported 4% year-over-year decline in September clear aligner case volumes.
Similarly, Stifel has lowered its price target for Align Technology to $285, while still recommending it as a Buy. The firm attributes this adjustment to a mix of market dynamics and internal company factors.
On the other hand, Needham initiated coverage on Align Technology with a Hold rating, recognizing the company's potential for long-term earnings per share (EPS) growth and a revenue growth rate of 6-7%. Meanwhile, Piper Sandler's recent survey indicated Align Technology's Invisalign as the top clear aligner brand among teenagers, suggesting potential for further expansion in this market.
In terms of financials, Align Technology reported significant growth in the second quarter with total revenues of $1,028.5 million, primarily due to a surge in Clear Aligner volumes. The company's Q3 worldwide revenue is projected to range from $980 million to $1 billion, with total revenue growth for fiscal 2024 expected to be up 4% to 6%.
Align Technology also introduced a discount program for Costco (NASDAQ:COST) members in the United States and made a $75 million equity investment in Heartland Dental. These are among the recent developments investors should consider while assessing Align Technology's financial health and market position.
InvestingPro Insights
Align Technology's recent performance aligns with the market trends observed by Piper Sandler. According to InvestingPro data, the company's revenue growth has slowed to 5.5% over the last twelve months, with quarterly revenue growth at 2.63% in Q2 2024. This moderate growth reflects the challenges in case volumes mentioned in the article.
Despite these headwinds, Align Technology maintains a strong financial position. The company boasts a gross profit margin of 70.16% and an operating income margin of 17.34%, indicating efficient operations even in a challenging market. An InvestingPro Tip highlights that management has been aggressively buying back shares, which could signal confidence in the company's long-term prospects.
Another InvestingPro Tip notes that Align is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.8. This suggests that the stock may be undervalued considering its growth potential, supporting Piper Sandler's view that current share prices offer a good entry point.
For investors seeking a deeper understanding of Align Technology's potential, InvestingPro offers 7 additional tips that could provide valuable insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.