Align Technology, Inc. (NASDAQ:ALGN) investors will be delighted, with the company turning in some strong numbers with its latest results. Statutory revenue and earnings both blasted past expectations, with revenue of US$734m beating expectations by 37% and earnings per share (EPS) reaching US$1.76, some 287% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, Align Technology's 15 analysts are now forecasting revenues of US$3.16b in 2021. This would be a huge 38% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plunge 68% to US$6.98 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.86b and earnings per share (EPS) of US$5.85 in 2021. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 26% to US$405per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Align Technology, with the most bullish analyst valuing it at US$500 and the most bearish at US$175 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Align Technology's growth to accelerate, with the forecast 38% growth ranking favourably alongside historical growth of 22% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Align Technology to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Align Technology following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Align Technology going out to 2024, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 4 warning signs for Align Technology (2 are a bit concerning!) that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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