California-based Align Technology, Inc. ALGN, the designer and manufacturer of Invisalign System, has rallied 28.4% over the last three months, ahead of the S&P 500’s 4.5% gain. The stock has a market cap of $14.26 billion. The company’s five-year historical growth rate is also favorable at 26.6% as compared to 11.6% of the broader industry.
Also, the company represented a return of almost 30.8%, better than the broader industry’s gain of 4% over the last year.
With solid prospects, this Zacks Rank #1 (Strong Buy) stock is an attractive pick at present.
The company’s estimate revision trend for the current year has also been positive. In the past 60 days, 10 analysts moved north, with no movement in the opposite direction. The magnitude of estimate revision increased around 4.6% to $3.40 per share over the same time frame.
Let’s find out whether the recent positive trend is a sustainable one. Recently, Align Technology ended the second quarter of 2017 on a solid note, with earnings and revenues beating the Zacks Consensus Estimate.
Moreover, Align Technology was added to that the Standard & Poor's (S&P) S&P 500 Index in Jun 2107. The company has been added to the S&P 500 GICS Health Care Supplies Sub-Industry Index. This has bolstered investors’ confidence on the stock, implying promising prospects ahead.
In the same month, the company announced another encouraging step toward strengthening its position in the Invisalign brand – its most popular product line. While keeping up with its strategies to expand and invest in the rapidly growing Asia-Pacific region, Align Technology announced plans to build its first Invisalign manufacturing facility in China.
In May, the company announced the receipt of two U.S. patents for its SmartTrack aligner material that is exclusively used for Invisalign aligner treatment. Moving on, in a bid to gain traction in the same platform, in Mar 2017, Align Technology collaborated with Digital Smile Design. Post collaboration, Align Technology’s Invisalign clear aligner treatment will be used by dentists during tooth alignment procedures along with Smile Design protocols.
We are also upbeat about the multi-million dollar marketing campaign initiated by the company for its Invisalign brand in order to gain through increased awareness.
We are also optimistic about the company expanding work flow options of its leading iTero scanners. In this context, Align Technology recently launched a software upgrade for its iTero Element intraoral scanners that is capable of comparing patient scans over time with the new TimeLapse technology.
Additionally, the company has a strong cash balance that enables it to carry out share repurchase programs and in turn provide solid returns to investors.
However, downsides include unfavorable foreign currency that might affect the company’s revenues. Also, the company is exposed to seasonal demand fluctuations, higher operating expenses pertaining to increased head count along with higher investments targeted toward growth acceleration in geographical expansion and portfolio expansion.
Other Key Picks
Other top-ranked medical stocks are Edwards Lifesciences Corp. EW, Steris Plc STE and Lantheus Holdings, Inc. LNTH. Edwards Lifesciences sports a Zacks Rank #1, while Steris and Lantheus Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has gained around 2.7% over the last three months.
Steris has a positive earnings surprise of 0.78% over two of the trailing four quarters. The stock has gained 14.2% over the last three months.
Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 6.7% over the last three months.
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