On Dec 24, Zacks Investment Research upgraded Align Technology (ALGN) to a Zacks Rank #2 (Buy).
Why the Upgrade?
Align posted a stellar third-quarter 2014 with the company beating the Zacks Consensus Estimate on both lines. Earnings of 47 cents per share were up 11.9% year over year and also ahead of the Zacks Consensus Estimate of 43 cents.
Over the past few quarters, sales have increased consistently riding on the strength of Invisalign. Moreover, several features have been introduced across the Invisalign system, designed to address some of the most significant treatment challenges encountered by doctors. The company’s Invisalign G3 and G4 are working successfully.
Moreover, earlier this year, Align launched Invisalign G5 innovations to specifically treat deep bite malocclusion. Since then, successful adoption of Invisalign G5 has continued with positive customer feedback specifically from North American orthodontists.
We are also optimistic about the company’s strong balance sheet and healthy cash flow position. Overall, we believe Align holds positive potential with management successfully channelizing the three key strategic growth drivers of the company, viz. market expansion, product innovation and brand strength.
Moreover, we are impressed to note that Align has undertaken several strategies to further penetrate the malocclusion market. Scanner and Service revenues rose 7.1% in the last reported quarter. This increase reflects continued penetration in the market coupled with growing market share gains.
However, we are worried about the current economic uncertainty which continues to cast a negative impact on dental procedures. The competitive landscape remains challenging as well.
Key Picks from the Sector
Stocks worth a look in the similar sector are CR Bard Inc. (BCR), AmerisourceBergen Corporation (ABC) and Patterson Companies, Inc. (PDCO). All the three stocks hold a similar Zacks Rank #2.
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