ALGN - Embedded Expectations Analysis - 2021 10 04
Align Technology, Inc. (ALGN:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 61.1x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about utilization among teens and younger patients, gross margins, and the sustainability of demand.Specifically, management may have concerns about the sustainability of overall demand for Invisalign, competitor polymer differentiation, and higher operating expenses due to additional headcount. In addition, they may lack confidence in their ability to drive higher utilization among teens and younger patients, sustain quarterly performance in the Americas region, and maintain gross margins. Furthermore, management may be concerned about flat year-over-year Invisalign non-comprehensive ASPs and increased capex levels, and they may lack confidence in their ability to maintain scanner shipments and achieve their revenue guidance. Finally, they may be overstating the potential of the iTero and exocad businesscombination and the size of their target market.
Align Technology is a medical device company engaged in the design, manufacture and marketing of Invisalign? clear aligners and iTero? intraoral scanners and services for orthodontics, restorative and aesthetic dentistry. The company's segments are: Clear Aligner, which includes the Invisalign System, a method for treating malocclusion based on a proprietary computer-simulated virtual treatment plan and a series of doctor-prescribed, custom manufactured, clear plastic, removable aligners; and Scanners and Services, which includes Intraoral scanning that enables the dental practitioner to create a 3D image of the patient's teeth (digital scan) using a handheld intraoral scanner.
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