Technology stock

Why Align Tech Stock Just Appeared

What happened

Actions of the manufacturer of clear braces Alignment technology (NASDAQ:ALGN) jumped 4.1% as of 2:00 p.m. EDT Thursday after the company behind popular product Invisalign reported better-than-expected sales and earnings for its fiscal third quarter last night.

Looking ahead to the third quarter, analysts had expected Align to earn $2.60 per share on sales of $977.8 million. Instead, Align said it earned $2.87 per share on sales of more than $1 billion.

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So what

Granted, that $2.87 was just a pro forma number. But third-quarter revenue rose 38% year-over-year at Align, hitting a record $1.02 billion. And with operating profit margins up 160 basis points when calculated using generally accepted accounting principles (GAAP), Align didn’t look too shabby either, earning $2.28 per share. , an increase of 29.5% year-on-year.

Align CEO Joe Hogan boasted that Align saw growth in “all regions, all customer channels and all products”.

Now what

And Align hasn’t stopped growing. Finalizing its guidance through the end of this fiscal year, the company says it expects revenue to eventually grow 58% to 60% from 2020 to between 3.9 and 3.95 billions of dollars. Operating profit margins on these revenues are expected to be around 25%, slightly down from 25.7% levels in Q3. Additionally, Align says it will likely continue to repurchase stock in the fourth quarter, repurchasing about $100 million worth of stock.

Now, for one thing, Align’s revenue forecast is a bit below what analysts had expected. As of last report, consensus targets called for Align to raise $3.94 billion in revenue this year, and management’s midpoint guidance suggests it could miss that mark. On the plus side, the share buyback pledge gives Align a better chance to focus net earnings on fewer shares outstanding to more easily meet or exceed Wall Street’s earnings target of 10.91. $ per share.

Translation: After beating earnings in the third quarter, there is still a chance that we will see another beating in the fourth quarter.

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