Align Technology Stock: Buying the Dip Amid Earnings Misses

Align Technology's Q2 earnings fell short of predictions due to softer volumes and economic uncertainty. However, the company's products remain popular, and a shift in external conditions could stimulate performance. Align is spending $170 million to optimize manufacturing and reduce costs, and its systems and services business has seen a 6% sales increase. Nine out of 15 analysts rate the stock a Buy, with 56% upside potential despite a 29% decline in the last month.

Align Technology, Inc. (ALGN) reported its second-quarter 2025 earnings on July 30, 2025, with both adjusted earnings per share (EPS) and revenue falling short of analyst expectations. The company's stock dropped by 34.2% in after-market trading following the announcement. Adjusted EPS was $2.49, up 3.3% year-over-year but missing the Zacks Consensus Estimate by 3.1% [1]. GAAP EPS for the quarter was $1.72, reflecting a rise of 43.4% from $1.28 in the comparable period of 2024.

Revenue for the second quarter was $1.01 billion, a 1.6% decrease year-over-year and a 4.6% miss of the Zacks Consensus Estimate. The Clear Aligner segment, which accounts for a significant portion of the company's revenue, saw a 3.3% decrease in revenue to $804.6 million, while the Imaging Systems and CAD/CAM Services segment grew by 5.6% to $207.8 million [1].

Align Technology also announced a restructuring plan that includes layoffs and one-time charges of $150-$170 million in the second half of fiscal 2025. These charges are expected to impact the company's GAAP and non-GAAP margins. The restructuring aims to align the company with its long-term growth objectives and improve operational efficiency.

Despite the recent challenges, Align Tech remains well-positioned in the dental tech industry, which is projected to grow at a 31.3% CAGR through 2030. The company's market leadership and innovation edge, including its i-Tero digital scanner and the recent launch of the Invisalign® System with mandibular advancement, suggest it is poised to benefit from these trends [2].

Nine out of 15 analysts rate the stock a Buy, with 56% upside potential despite a 29% decline in the last month. Leerink Partners analyst Michael Cherny reiterated his Buy rating, citing strong cash flow and a solid balance sheet, despite the company's recent setbacks [3]. Cherny maintains an Outperform rating and sees the current stock price decline as an overreaction to the company's long-term growth potential.

References:
[1] https://finance.yahoo.com/news/algn-stock-falls-q2-earnings-124600344.html
[2] https://www.nasdaq.com/articles/align-algn-q2-revenue-falls-16
[3] https://www.marketscreener.com/news/leerink-partners-adjusts-price-target-on-align-technology-to-188-from-248-maintains-outperform-ra-ce7c5fdddc8ef622