Thursday, February 2

What Is Align Technology, Inc.’s (NASDAQ:ALGN) Share Price Doing?

Let’s talk about the popular Align Technology, Inc. (NASDAQ:ALGN). The company’s shares saw a decent share price growth in the teens level on the NASDAQGS over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Align Technology’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Align Technology

Is Align Technology Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.5% below my intrinsic value, which means if you buy Align Technology today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $206.67, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Align Technology’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Align Technology?

NasdaqGS:ALGN Earnings and Revenue Growth December 23rd 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Align Technology’s earnings over the next few years are expected to increase by 38%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in ALGN’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on ALGN, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it’s equally important to consider the risks facing Align Technology at this point in time. For example – Align Technology has 1 warning sign we think you should be aware of.

If you are no longer interested in Align Technology, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

What are the risks and opportunities for Align Technology?

Align Technology, Inc., a medical device company, designs, manufactures, and markets Invisalign clear aligners and iTero intraoral scanners and services for orthodontists and general practitioner dentists, and restorative and aesthetic dentistry.

View Full Analysis

Rewards

  • Trading at 1.5% below our estimate of its fair value

  • Earnings are forecast to grow 16.04% per year

Risks

  • Profit margins (13.2%) are lower than last year (19.7%)

View all Risks and Rewards

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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