Shares of Align Technology (ticker: ALGN) took a significant hit as the invisible braces company reported disappointing quarterly earnings and revised its revenue guidance due to a slowdown in demand. The third-quarter adjusted earnings came in at $2.14 per share, falling short of Wall Street estimates of $2.26, according to FactSet. Net revenue was reported at $960.2 million, below expectations of $994.5 million.
President and CEO Joe Hogan acknowledged the industry-wide challenges in a press release, stating, "Dental practices and industry research firms have reported deteriorating trends, including decreased patient visits and increased patient appointment cancellations, along with fewer orthodontic case starts overall, especially among adult patients."
In response to this news, shares of Align Technology plummeted by 24% to $192 during premarket trading. However, it's worth noting that the stock had experienced a 20% increase earlier this year.
Looking ahead, the company provided revised revenue guidance for the fourth quarter, projecting figures between $920 million and $940 million. For the full year, Align Technology now forecasts revenue of $3.83 billion to $3.85 billion, down from the previously estimated range of $3.97 billion to $3.99 billion.
While this quarter proved challenging for Align, William Blair analysts Brandon Vazquez and Justin Lin, who rate the shares at Outperform, still found reasons to be hopeful. In a research report, they highlighted a few positive aspects from the quarter that should instill confidence in the company's medium- to long-term growth potential.
In conclusion, Align Technology is facing headwinds with its recent earnings and revised revenue guidance, mainly due to a decline in patient visits and orthodontic case starts. However, despite the current stock volatility, there are bright spots that suggest a promising future for the company.
