Align Technology belongs to the Dental supplies industry, which is part of the Medical sector. The company products include restorative and orthodontic products as well as aesthetic dentistry products. The Scanner and Services and Clear Aligners are the operational segments of the company. The Scanner and the Services section include scanning systems like orthodontic or restorative software options and single hardware platforms, ancillary products, and other services. Clear Aligner section includes Invisalign full and teen and assisted products and vivera retainers for treating malocclusion. The Arizona-based company has been operating since its foundation in 1997 in Tempe, AZ. The company has been in the news often because of the align technology stock price.
Solid performance pushes up align technology stock price
The solid performance of Align Technology Inc. in the second quarter of 2021 grabbed headlines, and market watchers were optimistic about the rally to continue for the rest of the year and beyond. The company’s continued thrust into adopting its digital platform is the reason for the optimism. Despite concerns about foreign exchange headwinds and stiff competition, the company met the expectations of ending the year on a high note.
Since mid-2020, Align Technology stock surged outperformed the industry. Compared to the industry growth rate of 36.5%, the company recorded a spectacular growth of 130%, leaving S&P500 trailing far behind at 36.6%. The company has a market capitalization of $56.2 billion, and the growth projection for the next 5 years is expected to be 26.6%. The company hopes to continue its domination in segmental performance. In the trailing four quarters, the company surpassed estimates by 87.27%.
Other high points about company performance
Q2 results are awe-inspiring – Despite the challenging business environment, the results of Align Technology were higher than expected in the second quarter of 2021. The company recorded solid revenue growth that indicted continued momentum in both Systems and Services and Clear Aligners. The company gained tailwind from the adoption of the digital platform. It is expecting high global growth in iTero business buoyed by the continued adoption of the next generation scanners belonging to the iTero Element 5D plus Series and imaging systems. There are reasons for encouragement from improved operating income, year-on-year, and robust gross margin expansion.
Growth driven by international operations – Driving adoption of Invisalign Technology is high on the agenda of Align Technology. It includes technology/product development, an extension of the Invisalign Technology brand, clinical effectiveness, and boosting international growth. On a sequential year-on-year basis, Invisalign shipments rose by 127% and 149%, respectively. In Europe, the Middle East, and Africa (EMEA) region, Invisalign case volumes were up 265% year-on-year and 17% sequentially. The company experienced broad-based solid growth across all markets. The growth in digital scans used for Invisalign case submissions rose by 76.2% year on year for its international business. For the Americas, the number went up by 86.6% than a year ago.
How does the company see the future?
Soon on ending the second quarter, riding on the stellar performance of the first two quarters of 2021, Align Technology raised its financial outlook for 2021 and hoped to achieve the numbers given below.
Revenue for the year is likely to be between $3.85 billion and $3.95 billion, which is a steep increase of 55-60% over 2020. The previous range was $3.7 billion to $3.9 billion.
Revenue growth in the second half of 2021 is likely to be more than 25%, which is the mid-point of the company’s operating model target in the long run, with a target of 20% to 30%.
However, 3Ms Unitek, Dentsply Corporation, and Danaher Corporation’s Sybron Dental Specialties, the traditional orthodontic appliances players, can pose stiff competition for Align Technology, which the company is well aware of.
Another area of concern is the company’s adverse financials over the past few quarters, primarily due to unfavorable foreign currency translation.
Estimate trends
For the year 2021, Align Technology witnessed a trend of positive estimate revision. The company’s third-quarter revenue as projected by the Zacks Consensus Estimate suggests a rise of 31.1% from the number reported a year ago.
Considering the upsides, Align Technology stock price is likely to live up to the expectations created by its consistent performance over the year.
