Align Technology (ALGN) Stock Forecast & Price Target

Align Technology, the leading manufacturer of clear aligners, reported a year-over-year growth in teen case starts of 8.3%, driven by strong performance in the APAC and EMEA regions, as well as a 4.9% increase in new Invisalign case starts to 647.8k. The company anticipates sequential growth in volumes and average selling prices, projecting an adjusted operating margin of 26% in the fourth quarter, backed by robust trends in international markets and direct-to-consumer channels. Additionally, while clear aligner sales of $804.6 million fell short of market expectations, the 5.6% year-over-year increase in scanner and service sales to $207.8 million highlights a positive aspect of Align’s diversified revenue streams.

Align Technology experienced a disappointing financial performance, with adjusted earnings per share (EPS) of $2.49 falling short of expectations at $2.57, highlighting a potential issue in revenue visibility. Additionally, the company's adjusted gross margin percentage decreased year-over-year to 70.5%, which, although slightly above forecasts, was insufficient to offset a significant revenue miss that affected operating margins, resulting in a decline to 21.3%. Furthermore, due to a weaker macroeconomic environment, management revised its growth outlook for clear aligner volume and revenue downwards, raising concerns about future demand and operational performance.