Align Technology (ALGN) to Post Q3 Earnings: What's in Store?
Align Technology, Inc. ALGN is set to release third-quarter 2022 results on Oct 26, after the closing bell.
The company reported adjusted earnings per share of $2.00 during the last reported quarter, which missed the Zacks Consensus Estimate by 5.7%. The company beat earnings estimates in two of the trailing four quarters and missed on two occasions, the average surprise being 2.43%.
Let’s look at how things have shaped up prior to this announcement.
Factors at Play
Total Clear Aligner
Align Technology is likely to have gained from increasing clear aligners shipments to Invisalign doctors worldwide. The company, in the last reported quarter, witnessed a greater uptake of clear aligners, especially among first-time customers. Analysts expect this trend to have continued in the to-be-reported quarter, aiding sales growth.
Strong potential exists, particularly in the teen segment, with an increase in the number of doctors submitting teen cases in the past few months. Further, Invisalign First for kids has been gaining market share rapidly across all regions. We are also optimistic about Align’s recently-introduced Invisalign Teen Packs to have registered strong performance in the United States, Canada and France in Q3.
Align Technology, Inc. Price and EPS Surprise
Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote
The other latest Invisalign innovations for the Align Digital Platform, including the ClinCheck Live Update, the Invisalign Practice App, Invisalign Personalized Plan, Invisalign Smile Architect and the Cone Beam Computed Tomography integration feature for ClinCheck digital treatment planning software, too are likely to have fortified Invisalign utilization.
As the economies around the world return to normalcy amid COVID-19 concerns, we anticipate Invisalign case volumes to have rebounded across the Americas and international regions. However, the ongoing conflict in Ukraine and the heightened volatility in foreign exchange rates might have posed hindrances to recovery, hampering business performance in Q3. Further, staffing shortages and the ongoing inflationary pressure are expected to have dragged the company’s profitability down in Q3.
Overall, our model shows a 2.6% year-over-year decline in total clear aligner revenues in the third quarter.
The Zacks Consensus Estimate for Clear Aligner revenues is pegged at $803 million, suggesting a 4.2% drop from the year-ago quarter’s reported figure.
Imaging Systems & CAD/CAM Services Business
Align Technology is expected to have gained from robust iTero scanner services revenues as it did in the previous quarter. The company has been witnessing continued growth in the iTero scanner installed base, with strong adoption of the iTero Element 5D Plus imaging system. This growing uptake of iTero scanners is likely to have sustained, benefiting the company’s top-line growth.
The continued rise in intraoral digital scans used for Invisalign case submissions signals an enhanced digital adoption within dental offices. In Q2, the total worldwide intraoral digital scans submitted to start an Invisalign case increased to 88.4% on a year-over-year basis. We anticipate this trend to have continued in the to-be-reported quarter, advancing business performance.
The company’s third-quarter results are likely to benefit from exocad CAD/CAM products and services revenues. These offerings, including restorative dentistry, implantology, guided surgery and smile design products, extend the Align Digital Platform toward fully integrated interdisciplinary end-to-end workflows.
Our model projects a 2.7% year-over-year decline in total Imaging Systems & CAD/CAM Services revenues in the third quarter. However, the Zacks Consensus Estimate for this segment’s revenues is pegged at $181 million, indicating a 1.6% improvement from the year-ago quarter’s reported figure.
Q3 Estimates
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $973.4 million, suggesting a decline of 4.2% from the year-ago reported figure.
The Zacks Consensus Estimate for its third-quarter 2022 EPS of $2.20 suggests a 23.3% fall 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) 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: The company has an Earnings ESP of -0.80%. 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 a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Charles River Laboratories International CRL has an Earnings ESP of +0.66% and a Zacks Rank of #3. The company will release third-quarter 2022 results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Charles River has a long-term historical earnings growth rate of 17.7%. Charles River’s earnings yield of 5.47% compares favorably with the industry’s -2.84%.
McKesson MCK has an Earnings ESP of +0.27% and a Zacks Rank of #2. McKesson is scheduled to release third-quarter 2022 results on Nov 1.
McKesson’s long-term historical earnings growth rate is estimated at 14.2%. MCK’s earnings yield of 6.94% compares favorably with the industry’s 5.22%.
Humana HUM currently has an Earnings ESP of +0.76% and a Zacks Rank of #1. Humana is slated to release third-quarter 2022 results on Nov 2.
Humana’s long-term historical earnings growth rate is estimated at 16.2%. HUM’s earnings yield of 5.02% compares favorably with the industry’s 5.00%.
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