What's In Store For Align Technology's (ALGN) Q4 Earnings?

Align Technology, Inc. (NASDAQ:ALGN) is set to report fourth-quarter 2019 results on Jan 29, after the closing bell.

In the last reported quarter, the company delivered a positive earnings surprise of 12.3%. The company has a trailing four-quarter earnings beat of 11%, on average.

Let’s take a look at how things are shaping up prior to this announcement.

Key Catalysts

Invisalign System

Align Technology is expected to have gained from continued adoption of Invisalign system in the fourth quarter of 2019.

Invisalign portfolio expansion, anticipated revenue growth at the Clear Aligner segment on sustained Invisalign case volume growth across customer channels and geographies, and estimated growth in the teenage patient segment are likely to get reflected in the upcoming quarterly results. We believe Invisalign First, Invisalign Lite, Invisalign Go and treatment with Mandibular Advancement have seen continued strength in the fourth quarter.

For the American markets, we expect consistent growth in Invisalign volumes in orthodontist and GP channels (including the DSOs) as well as continued uptick in the number of teenage patient cases. In Latin America, Align Technology’s sustained investments in the Clear Aligner segment should get reflected in the company’s Invisalign volume growth in this region. In recent times, the company is witnessing solid momentum across comprehensive and non-comprehensive products in Latin America, led by Brazil. This trend is expected to have sustained through the fourth quarter.

For International markets, we anticipate fourth-quarter Invisalign volumes to reflect sequential growth, mirroring seasonally stronger periods within the APAC region. For the to-be-reported quarter, the company anticipates strong Invisalign volume growth, particularly in Greater China and Japan. Increased adoption of Invisalign First in Japan, ANZ and Taiwan as well as favorable results from professional marketing initiatives is expected to have driven Invisalign growth during the fourth quarter.

Scanner & Service Business

Align Technology has been generating solid revenues from the Scanner and Service business over the past few quarters. The company has been witnessing increased adoption of iTero scanners for Invisalign case submissions, especially in North America and the Asia-Pacific region. We expect this to get reflected in fourth-quarter results.

The recent commercial launch of the iTero Element 2 scanner in China and the global distribution deal inked with Zimmer Biomet Dental for the iTero Element suite of intraoral scanners are expected to have contributed to Align Technology’s top line in the to-be reported quarter.

Which Way Are Estimates Treading?

The Zacks Consensus Estimate for fourth-quarter 2019 revenues is pegged at $645.7 million, indicating an improvement of 20.9% from the year-ago figure. The same for earnings per share is pinned at $1.39, suggesting growth of 15.8%.

Q4 Guidance

For the fourth quarter of 2019, the company projects revenues of $640-650 million (indicating 20-22% growth from a year ago). Operating margin for the quarter is estimated in the band of 22% to 22.7%. Further, continuation of the company’s operational expansion efforts might have resulted in fourth-quarter capital expenditure of $30-$35 million.

Earnings Whispers

Our proven model predicts earnings beat for Align Technology this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Align Technology has an Earnings ESP of +1.70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering from the same space with the right mix of elements to surpass expectations this earnings season.

Alexion Pharmaceuticals (NASDAQ:ALXN) has an Earnings ESP of +5.54% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exact Sciences Corporation (NASDAQ:EXAS) has an Earnings ESP of +12.08% and a Zacks Rank of 2.

NuVasive (NASDAQ:NUVA) has an Earnings ESP of +0.88% and a Zacks Rank of 3.

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