Is Align Stock Truly Worth its High Valuation Today?

ALGN has dropped more than 60% in price this year

Jun 10, 2022 at 12:34 PM
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Align Technology, Inc. (NASDAQ:ALGN) is a dental care company that designs, manufactures, and sells the Invisalign clear aligners used in orthodontics, the iTero intraoral scanners, and the exocad CAD/CAM software. On June 6, Align Technology announced the award of 11 research grants to universities under its 12th Annual Research Award Program. The dental care company awarded $275,000 in research grants to universities worldwide for advancing orthodontics and dental research as part of its ongoing awards program.

Align stock is sitting dangerously close to its roughly five-year low of $250.64, touched on May 12. The 30-day rejected a recent attempt to separate itself from this low, and now ALGN is trading at a 61.1% year-to-date deficit. 

algn june 10

The equity could be ripe for analyst downgrades, as all but one of the eight in coverage call it a "buy" or better. Plus, the 12-month consensus price target of $439.90 is a whopping 71.8% premium to current levels.

The dental care company still provides a high valuation at a forward price-earnings ratio of 27.03 and a price-sales ratio of 5.31 despite Align stock’s bearish form this past year. Align Technology is also anticipated to see a 10.6% decrease in earnings for fiscal 2022.

Nonetheless, ALGN is expected to report a 9.7% increase in revenues for fiscal 2022 and a 18.9% increase for fiscal 2023. The dental care name is also expected to bounce back on the bottom line in fiscal 2023, with a 25.8% estimated increase in earnings, making Align stock an intriguing long-term option as the business recovers from its earnings decline. In addition, Align Technology currently has $1.01 billion in cash and $130.23 million in total debt on their balance sheet, which should help them maintain their top line growth. Overall, Align stock is a viable option for growth investors despite its high valuation currently.

 

 

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