Align Technology (ALGN) to Post Q3 Earnings: What's in Store?
Align Technology, Inc. ALGN is set to release third-quarter 2023 results on Oct 25 after the closing bell.
The company posted adjusted earnings per share (EPS) of $2.22 in the last reported quarter, which surpassed the Zacks Consensus Estimate by 9.9%. Align Technology beat earnings estimates in three of the trailing four quarters and missed in one, the average negative surprise being 1.76%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Clear Aligner Business
Within this business, we assume ALGN is likely to have witnessed improving trends across regions and strength in teen and younger patient volumes, driven by momentum in submitters and utilization and continued growth from Invisalign First. The Teen orthodontic treatment segment, which represents Align’s largest opportunity for Clear Aligner sales to orthos, may have reported increased utilization rates in the third quarter of 2023. The segment reflected the highest annual growth rate in the last reported quarter since 2021.
Align Technology, Inc. Price and EPS Surprise
Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote
In the third quarter of 2023, Clear Aligner non-case revenues may have benefited from continued growth from Vivera retainers as well as commerce sales, which include everything from a liner case to whitening and cleaning products. The company’s first subscription-based clear aligner program, DSP, has been successful in addressing an important and growing opportunity for experienced Invisalign doctors.
In the last reported quarter, ALGN expanded it to Spain and the Nordic countries and expects to launch in France and the United Kingdom in the second half of this year. We expect the DSP subscription program to continue ramping up in the third quarter and contribute to the strong overall volume growth of Clear Aligners, boosting the company’s revenue growth.
Across the North American region, the strong uptake of the Invisalign Comprehensive three and three product is also likely to have driven sequential volume growth in the third quarter. We also expect the continued adoption of Invisalign Moderate and Invisalign Comprehensive three and three products in the EMEA region. Teen case starts are likely to have increased in the third quarter, driven by Invisalign First and the newest Invisalign Teen case packs.
Further, Clear Aligner volumes may reflect sustained improvement trends in China and other key markets like Japan, Taiwan, Korea and India in the third quarter of 2023. In addition, performance across the APAC region may have witnessed increased Invisalign submitters and higher utilization, especially for teen patients, driven by growth from Invisalign First in the orthodontic channel. The Invisalign Comprehensive three and three product is now available in Hong Kong, Korea, Taiwan and India and is likely to be introduced by the company in China in the to-be-reported quarter.
As witnessed over the past few quarters, the Clear Aligner volume from Align’s DSO (dental service organizations) customers continues to outpace non-DSO customers. Representing one of the most important channels for digital orthodontics and restorative dentistry, the company has well-established relationships with many DSOs, especially in the United States, such as Smile Doctors and Heartland Dental. We expect these trends to have contributed to Align Technology’s top line in the third quarter of 2023.
Our model projects ALGN’s Clear Aligner revenues for the third quarter to have improved 11.8% year over year to $819.3 million.
Imaging Systems & CAD/CAM Service Business
The Systems & Services business is likely to have witnessed increased scanner volumes across regions in the third quarter of 2023. The Services and non-system scanner revenues may have risen due to the increased sales of certified pre-owned scanners and higher subscription revenues. In the last reported quarter, higher subscription revenues resulting from the large number of iTero scanners in the field have driven service revenues. We expect this to have continued in the third quarter of 2023 as well.
Per our model, Systems & Service business revenues for the third quarter suggest a 14.9% rise year over year to $181 million.
Q3 Estimates
The Zacks Consensus Estimate for Align Technology’s third quarter 2023 revenues is pegged at $1.0 billion, suggesting growth of 12.4% from the year-ago reported figure.
The Zacks Consensus Estimate for the company’s third-quarter EPS of $2.27 indicates a staggering 66.9% improvement from the year-ago reported figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP has a higher chance of beating estimates. However, that is not the case here, as you can see below:
Earnings ESP: Align Technology has an Earnings ESP of -3.84%. 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 #3.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this time:
Ligand Pharmaceuticals LGND has an Earnings ESP of +2.94% and a Zacks Rank #1. The company is expected to release third-quarter 2023 results soon. You can see the complete list of today’s Zacks #1 Rank stocks here.
LGND’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 52.47%. The Zacks Consensus Estimate for Ligand Pharmaceuticals’ third-quarter EPS is expected to increase 65.9% from the year-ago reported figure.
Catalyst Pharmaceuticals CPRX has an Earnings ESP of +35.54% and a Zacks Rank #2. The company is expected to release third-quarter 2023 results shortly.
CPRX’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 7.17%. The Zacks Consensus Estimate for Catalyst Pharmaceuticals’ third-quarter 2023 EPS is expected to rise 50% from the year-ago reported figure.
Spero Therapeutics SPRO currently has an Earnings ESP of +60.00% and a Zacks Rank #2. The company is expected to release third-quarter 2023 results shortly.
SPRO’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 72.4%. The Zacks Consensus Estimate for Spero Therapeutics’ fiscal 2023 third-quarter loss per share is expected to be 54.6% narrower from the year-ago reported figure.
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Align Technology, Inc. (ALGN) : Free Stock Analysis Report
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