Align Technology's Invisalign Dependence: Boon Or Curse?

On Aug 16, 2016, we issued an updated research report on California-based Align Technology Inc. (NASDAQ:ALGN) , a developer of aligner therapy, intra-oral scanners and CAD/CAM (computer-aided design and computer-aided manufacturing) digital services. Currently, Align carries a Zacks Rank #2 (Buy).

Align Technology ended the second-quarter 2016 on a promising note, squarely beating the Zacks Consensus Estimate. Persistent strong Invisalign volume growth across the company’s entire customer base, primarily drove the encouraging results.

Geographically, the company was successful in delivering double-digit sales growth in North America as well as overseas. In the North America, the company witnessed continued increase in utilization among its orthodontist customers, which reached record levels in both ortho and GP channels.

In the international space also, the company delivered a strong performance across all countries.In the EMEA region, growth was led by Spain, France and the Netherlands. In Asia Pacific, strong expansion was observed in China, Japan, South Asia and Taiwan.

However, a vast majority of Align’s total net revenues is highly dependent on the sale of its Invisalign System and the same trend is expected to continue at least in the near future.Management fears that if somehow consumer demand for Align’s orthodontic services declines or consumers become averse to adopt Invisalign as rapidly as management expects it, then that might affect the company’s business severely.

We are concerned about the ongoing economic uncertainty too, which casts a gloom on Align’s dental procedures as well. the competitive landscape also remains a major headwind.

Key Picks in the Sector

Some better-ranked medical stocks worth mentioning are ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) , Anika Therapeutics Inc. (NASDAQ:ANIK) and Heska Corp. (NASDAQ:HSKA) . All these stocks sport a Zacks Rank #1 (Strong Buy).