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Align Technology (ALGN) to Post Q1 Earnings: What's in Store?

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Align Technology, Inc. (ALGN - Free Report) is set to report first-quarter 2022 results on Apr 27, after the closing bell.

The company reported adjusted earnings per share (EPS) of $2.83 during the last-reported quarter, which surpassed the Zacks Consensus Estimate by 6.4%. The company beat earnings estimates in the trailing four quarters, the average surprise being 16.5%.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

Invisalign System

In the last reported fourth-quarter 2021, Invisalign clear aligner volumes were impacted by the resurgence in COVID-19 cases that resulted in customer lab shortages from a staff standpoint, practice closures or reduced hours and less patient traffic. Management expects these COVID-led headwinds to have continued into the first quarter, hampering the clear aligner volumes. However, on a positive note, an improvement in Invisalign case submissions and growing revenue contributions from Invisalign First, Invisalign Moderate and Invisalign Go products are anticipated to have driven first-quarter sales.

Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. Price and EPS Surprise

Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote

Align Technology’s continued efforts to build on its successful "Invis is" multimedia campaign and drive awareness about the Invisalign treatment in adult, teen, and parent consumer segments are likely to have driven Invisalign utilization in the to-be-reported quarter. The newly introduced Invisalign systems innovations for the Align Digital Platform, including the ClinCheck Live Update for 3D controls; the Invisalign Practice App; Invisalign Personalized Plan; and the Invisalign Smile Architect, are expected to bolster Invisalign utilization as well.

Further, Align Technology has been developing a robust retainer strategy to raise brand awareness for Vivera retainers and drive engagement with doctors while connecting consumers with doctors through demand creation programs and concierge service. We anticipate these initiatives to drive enhanced sales of Vivera retainers and increase the company’s shares in the underpenetrated retention market.

The Zacks Consensus Estimate for Invisalign System’s revenues is pegged at $863 million, suggesting an increase of 14.6% from the year-ago quarter’s reported figure.

Imaging Systems & CAD/CAM Services Business

Align Technology is likely to have gained from the continued adoption of iTero scanners, including the iTero Element 5D Plus imaging system. Per the last-reported quarter’s earnings call, the iTero Element 5D Plus imaging system represented 75% of iTero volumes. The company has also been observing an increase in intraoral digital scans conducted with iTero scanners for Invisalign case submissions. We anticipate this trend to have continued in the to-be-reported quarter, making significant contributions to the company’s top line.

The company’s first-quarter performance is likely to have benefitted from exocad CAD/CAM products and services revenues. During the fourth quarter, exocad announced the availability of the newly released ChairsideCAD 3.0 Galway software across the United States and Canada. The ChairsideCAD 3.0 Galway is the next generation of easy-to-use CAD software for single-visit dentistry. The current availability of the ChairsideCAD 3.0 Galway in North America, the European Union and other selected markets is expected to have had a positive impact on the first-quarter sales performance.

The Zacks Consensus Estimate for this segment’s revenues is pegged at $177 million, indicating a surge of 25.1% from the year-ago quarter’s reported figure.

Q1 Estimates

The Zacks Consensus Estimate for the company’s first-quarter 2022 revenues is pegged at $1 billion, suggesting an improvement of 12.2% from the year-ago reported figure.

The Zacks Consensus Estimate for its first-quarter 2022 EPS of $2.25 suggests a 9.6% fall from the year-ago reported figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here, as you can see:

Earnings ESP: The company has an Earnings ESP of +4.60%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

Alcon Inc. (ALC - Free Report) has an Earnings ESP of +10.04% and a Zacks Rank of #2. Alcon is expected to release first-quarter 2022 results on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alcon’s long-term earnings growth rate is estimated at 14.7%. ALC’s earnings yield of 3.05% compares with the industry’s (6.46%).

Lucira Health, Inc. has an Earnings ESP of +485.72% and a Zacks Rank of 2. The company is slated to report first-quarter 2022 results on May 12.

Lucira Health’s long-term earnings growth rate is estimated at 40.2%. LHDX’s earnings yield of 24.57% compares favorably with the industry’s 0.39%.

Meridian Bioscience, Inc. has an Earnings ESP of +26.32% and a Zacks Rank of 2. The company is scheduled to release second-quarter fiscal 2022 results on May 6.

Meridian Bioscience’s long-term historical earnings growth rate is 16.3%. VIVO’s earnings yield of 5.04% compares favorably with the industry’s 0.39%.

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