Why Analysts Are Lining Up for Align Technology

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Part 3
Why Analysts Are Lining Up for Align Technology PART 3 OF 4

Align Technology’s Profit Margins Expected to Expand in 2017

Growth drivers in 2017

In 2Q17, Align Technology (ALGN) added 55,000 teen Invisalign patients worldwide. That number grew 37.6% YoY (year-over-year) basis and 12.6% sequentially, significantly higher than the growth seen in adult patients. The rapid uptake of Invisalign in North America boosted the total case volumes shipped to orthodontists by 34.5% YoY. In 2Q17, Invisalign reached 13.6 cases per orthodontist. The company witnessed 18.9% YoY growth in Invisalign cases shipped to North American GPs (general physicians) and utilization reached 3.3 cases per doctor.

With the teen segment continuing to drive Invisalign demand in future quarters, Align Technology stock is expected to rise. The Vanguard S&P 500 ETF (VOO) may also benefit, as Align Technology makes up about 0.06% of its portfolio.

Align Technology&#8217;s Profit Margins Expected to Expand in 2017

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Net profit margin to expand in 2017

In fiscal 2017, Wall Street analysts expect that Align Technology will report a net profit margin of ~19.9%, which represents YoY growth of ~230 basis points. Peers 3M (MMM), Danaher (DHR), and Dentsply Sirona (XRAY) are expected to report net profit margins of ~17.6%, ~12.7%, and ~1.7%, respectively.

Invisalign Lite launch

In 2Q17, Align Technology witnessed solid uptake of its newly launched Invisalign Lite clear aligner solution, which is targeted at simple to moderate malocclusion cases. This product, with just 14 aligner stages, aims for increased penetration of the GP sales channel. In the next article, we’ll discuss Align Technology’s market expansion strategy in greater detail.


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