Analysts Grow Bearish on ALGN Stock After New Low

ALGN shares have already been hit with several bear notes this year

by Josh Selway

Published on Jan 4, 2019 at 9:40 AM

Invisalign parent Align Technology, Inc. (NASDAQ:ALGN) was one of the darlings of the bull market in recent years. The shares boomed from their early 2017 perch in the mid-90s to their September 2018 record high of $398.88 -- but the tide has been turning since. Most notably, ALGN stock suffered a massive bear gap in October, and steadily fell in the subsequent months, yesterday hitting an annual low of $183.62. In the meantime, analysts have wasted little time lowering their expectations in 2019.

Just this morning Align received price-target cuts to $210 and $277 from Morgan Stanley and Credit Suisse, respectively. This follows a price-target cut to $255 from $330 out of Baird on Wednesday, and Evercore ISI's price-target reduction to $239 yesterday. There's plenty of room for this trend to continue, too, with ALGN's average 12-month price target still up at $296.57, and 11 of 13 covering brokerage firms handing out "strong buy" recommendations.

A shift in sentiment among near-term options traders could also work against the security in the near term. For example, its Schaeffer's put/call open interest ratio (SOIR) of 0.66 sits in the lowest percentile of its annual range, meaning short-term options traders are more call-skewed than at any point in the past year -- hinting at bullish expectations among this group.

Speaking of which, anyone interested in speculating on Align Technology stock should note that its 30-day at-the-money implied volatility stands at 66.2%, in the 100th annual percentile. As such, volatility expectations are unusually high right now for short-term options contracts.


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