Should Align Technology Stock Be Part of Your Watchlist Today?
13 July 2022 - 9:51PM
Finscreener.org
Few people in the world aspire to
be a dentist. However, we can’t do without them. Dentistry is one
of the most underrated sectors in the market, but it is also one of
the most stable ones. It doesn’t matter if there is a recession or
inflation is creeping up people will continue to spend on oral
hygiene. A stock that is part of this recession-resistant sector
is Align Technology (NASDAQ:
ALGN).
Align Technology is a company
that manufactures 3D scanners and the Invisalign clear aligners
used in orthodontics.
The company has a market
capitalization of $20.23 billion, which underscores the size and
scale of its business. Its aligners are expensive and can cost over
$2,000, but its customers can make payments over several years,
which should help its business even during
inflation.
Align stock slumps in 2022
Align stock has suffered in 2022,
and has underperformed the broader markets by a huge margin. It has
fallen over 60% so far, but that is what makes it a perfect buying
opportunity. The company’s numbers for Q1 weren’t great. It missed
EPS estimates by $0.09, leading to a crash in its stock
price.
Total revenues for the period
came in at $973.2 million, compared to $894.8 million in the
year-ago period. The company said that the continued impact of
COVID-19, especially in China, rising inflation, and the
Russia-Ukraine conflict, culminated in supply chain pressures that
impacted its numbers..
The fact that around half of
Align’s business occurs outside the U.S. didn’t help as unfavorable
foreign exchange rates negatively impacted its revenues, margins,
and EPS.
Strong guidance may drive ALGN stock higher
Align is still optimistic that it
will hit its long-term revenue growth target of 20-30%. The company
has a less than 10% share in the market where it operates, allowing
it enough room to grow itU+02019s top-line going forward. Globally,
there are over 500 million people who can avail of its products,
and the company is in a prime position to execute these
needs.
A Grand View Research report
says, “The global clear aligners market size was valued at USD 4.7
billion in 2021 and is expected to expand at a compound annual
growth rate (CAGR) of 29.5% from 2022 to 2030.”
In an investor letter earlier
this year, Polen Capital Growth Fund explained that Align
Technology continues to de-risk while focusing on growth. The
report emphasized Align manufactures over 800,000 unique clear
aligners each day, making it difficult for competitors to match its
scale.
Polen Growth Capital stated, “We
applaud management’s stewardship of the business thus far and
believe there is a very long period of compounding ahead of it.
Despite robust fundamentals, the company was swept up in the
sell-off that occurred during the quarter, and we took advantage of
the favorable valuation by raising it to an average position size
within the portfolio.”
Align Technology announced it
would repurchase up to $200 million of its stock in an accelerated
stock repurchase program.
The company’s revenues have grown
from $1.97 billion in 2018 to $3.95 billion in 2021, at a CAGR of
26.1%. Align Technology closed July 12 at $248. The consensus
on the target price is $474.33, which is a potential upside of over
90%.
As long as people want to ensure
they have straight and healthy teeth, Align Technology will
continue to grow. It’s one of the best examples of a buy forever
stock.
Align Technology (NASDAQ:ALGN)
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