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Align Technology (ALGN) to Post Q1 Earnings: What's in Store?

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Zacks Equity Research
·5 min read
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Align Technology, Inc. ALGN is set to report first-quarter 2021 results on Apr 28, after the closing bell.

In the last-reported quarter, the company reported adjusted earnings per share of $2.61 which surpassed the Zacks Consensus Estimate by 21.9%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on two occasions and missed the same in the other two, the negative earnings surprise being 782.12%, on average.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

Invisalign System

Per the company’s February update, Align Technology has been registering impressive sales performances for both Invisalign clear aligners and iTero imaging systems. This momentum is likely to have continued during the rest of the first quarter on the back of resumption of practices worldwide. Further, the uptick in Invisalign shipments, observed over the past few months, is likely to have continued during the to-be-reported quarter due to gradual recovery in businesses across all regions. These are likely to result in a significant uptick in first-quarter revenues.

Increasing adoption of Invasilign’s Virtual Care tools through the pandemic months looks encouraging. The company also confirmed recording increased use of iTero scanners, its Virtual Care and bracket buyback switch during its last update. This ongoing adoption of sustainable digital care is likely to have continued during the first quarter as well, thus driving revenues. Further, Align Technology’s expansion of its digital platform with cloud-based ClinCheck Pro 6.0 and ClinCheck In-Face Visualization tool for Invisalign treatment and Invisalign G8 with SmartForce Aligner Activation are expected to have significantly boosted the top line as well.

Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. Price and EPS Surprise
Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote

Clear Aligner shipments were robust during the last-reported quarter due to increasing customer adoption. This is likely to have continued during the first quarter as well on the back of positive feedback from Invisalign practices regarding the benefits of digital orthodontics. Robust adoption of the Align Digital and Practice Transformation or ADAPT program is also likely to have continued during the to-be-reported quarter, banking on increasing digital practice optimization. Growth in shipment volumes is expected on strong adoption of non-comprehensive products, thanks to Invisalign Go systems and Invisalign Moderate.

Additionally, partnerships with the New Orleans Saints and the Golden State Warriors look impressive. Also, the agreement with the National Football League buoys optimism on the stock.

Internationally, in Latin America, the Invisalign First is likely to have maintained its momentum on the back of a huge market for orthodontic treatment. Despite the company registering uptick in shipment volumes due to gradual reopening of practices across all regions and our expectations of the continuation of this trend during the to-be-reported quarter, the impact of the fresh wave of coronavirus infection looms large on the company’s top line.

The Zacks Consensus Estimate for Invisalign System’s revenues is pegged at $624 million, suggesting an upsurge of 29.5% from the year-ago quarter’s reported figure.

Imaging Systems & CAD/CAM Services Business

Align Technology, for the exocad CAD/CAM (computer-aided design/computer-aided manufacturing) products and services, had launched two large software releases — DentalCAD and exoplan — during the last-reported quarter. These are likely to have boosted the company’s top line during the first quarter.

Robust customer adoption of the Element 5D Imaging Systems over the past few months is likely to have continued during the first quarter. Further, the company, per its last update, had confirmed launching the iTero Element Plus Series, thus expanding its portfolio of iTero Element Scanners. These are likely to have considerably driven the top line in the first quarter.

The Zacks Consensus Estimate for this segment’s revenues is pegged at $100 million, suggesting an uptick of 44.9% from the year-ago quarter’s reported figure.

The Estimate Picture

The Zacks Consensus Estimate for first-quarter 2021 revenues is pegged at $826.2 million, indicating an improvement of 49.9% from the year-ago figure.

The same for the bottom line is pinned at earnings of $2.00 per share, suggesting a surge of 173.9%.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Align Technology has an Earnings ESP of -1.50%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2.

Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

Baxter International Inc. BAX has an Earnings ESP of +1.25% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Cooper Companies, Inc. COO has an Earnings ESP of +7.06% and a Zacks Rank of 2, at present.

Owens & Minor, Inc. OMI has an Earnings ESP of +2.41% and is a Zacks #1 Ranked stock.

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