Align Technology’s consensus estimates

Align Technology (ALGN) plans to release its second-quarter earnings on July 24 after the market closes. Analysts expect the company’s revenues to be up 22.26% YoY to $599.38 million in the second quarter. Analysts also estimate the company’s non-GAAP EPS to rise 16.29% YoY to $1.51.

In the first quarter, Align Technology reported revenues of $548.97 million, a YoY rise of 25.64%. The company beat the consensus estimate by $16.81 million. Non-GAAP EPS was up 0.85% YoY to $1.18. The company beat the consensus earnings estimate by $0.34.

Align Technology has a long history of earnings surprises and has surpassed the consensus non-GAAP EPS estimate for 14 out of the past 16 quarters. The company also has a strong history of revenue surprises. Align Technology has surpassed the consensus estimate only twice in the last 16 quarters. On July 19, the company closed at $281.21, 0.76% lower than its previous close. The stock is 3.51% up from its closing price on July 1. The company is also up 34.27% in 2019 YTD.

Growth drivers

The rapid uptake of Invisalign across geographic markets and channels has been a key revenue driver. The company also continues to report a strong rise in iTero Scanner and Services revenues. Align Technology is also benefitting from a first-mover advantage in the clear aligner market. The company has already trained a significant number of dentists in North America. In addition, strategic collaborations with other players in the orthodontics space have created a significant entry barrier for competitors. The company is also focused on expanding its presence in international markets.

Financial guidance

According to the first-quarter conference call, Align Technology expects revenues to be $590 million to $600 million in the second quarter. These estimates imply a YoY rise of 20% to 22%. The company expects diluted EPS to be $1.47 to $1.54 in the second quarter.

Align Technology’s valuation

Align Technology is currently trading at a PE multiple of 60.63x, which is significantly higher than that of peers such as Dentsply Sirona, Henry Schein, and Danaher. The premium valuation is attributable to the company’s leadership position and competitive advantage in the clear aligner market. To know more about the market opportunity in the clear aligners segment and competitive positioning of the company, please refer to Align Technology’s Growth Prospects amid Increasing Competition.

The 17 analysts tracking the company have an average target price of $340.19 on its stock, which indicates a potential upside of 20.97% in the next 12 months.

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