Here’s Why Align Technology Dropped 12.4% in August
What happened
After falling more than 23% in July, Align Technology (NASDAQ: ALGN) slipped another 12.4% in August, according to data provided by S&P Global Market Intelligence. Investors are clearly still worried about decelerating growth at the orthodontic-device specialist.
So what
On its second-quarter earnings call, Align Technology guided for third-quarter revenue growth of 16% to 19% compared to the year-ago quarter. That's a substantial slowdown from the 22.5% growth in the second quarter, which was a deceleration from the 25.6% year-over-year growth seen in the first quarter.
Management blamed slowdowns in China and in its young-adult category in North America for the moderating growth.
Image source: Getty Images.
At the end of July, Align Technology announced an accelerated stock repurchase plan to buy back $200 million worth of stock over three months. At the same time, president and CEO Joe Hogan committed to personally buying $1 million worth of shares.
Clearly, neither initiative has given investors much confidence.
Now what
This decline could certainly be a buying opportunity, but keep in mind that much of the decline was due to Align Technology being priced for growth. Even after the decline, shares are only down about 15% year to date. With so many healthcare stocks to invest in, it's hard to get excited about one that might be having trouble putting its foot back on the gas.
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Brian Orelli has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Align Technology. The Motley Fool has a disclosure policy.
This article was originally published on Fool.com
