Align Technology's Stock Plummets 37% Amid Lower Price Target and Pessimistic Rating

Align Technology (ALGN) stock fell 37% after missing earnings expectations and receiving a lower price target and pessimistic rating from an investment firm. Despite a non-GAAP net income of $181.1 million, net revenues dipped 1.6% to $1.012 billion. Mizuho reduced its price target to $210 from $245, maintaining an "outperform" rating. The stock's decline reflects weaker-than-expected patient conversion rates and a mixed earnings performance.

Align Technology (ALGN) stock experienced a significant decline of 37% on July 30, 2025, following the company's announcement of its second-quarter (Q2) 2025 financial results. The stock closed at $195.50, down from $304.30 just a week prior, reflecting a sharp drop in investor confidence.

The Q2 results revealed that Align Technology's total revenues for the quarter amounted to $1.012 billion, representing a 1.6% year-over-year decrease. The company's adjusted earnings per share (EPS) came in at $2.49, missing analysts' expectations [1]. Despite the non-GAAP net income of $181.1 million, the company's stock price fell sharply due to the missed earnings expectations and a lower price target from Mizuho Financial Group.

Mizuho Financial Group reduced its price target for Align Technology to $210 from $245, maintaining an "outperform" rating. The stock's decline can be attributed to weaker-than-expected patient conversion rates and a mixed earnings performance. The company reported a 3.3% year-over-year decrease in revenue from its primary product, Clear Aligners, primarily due to lower-than-expected volumes in Europe and North America. Conversely, revenues from Imaging Systems and CAD/CAM Services saw a 13.9% sequential increase and a 5.6% year-over-year increase [1].

Align Technology also announced a restructuring plan to streamline operations and reallocate resources, which will result in one-time charges of $150 million to $170 million in the second half of 2025. The company expects these actions to achieve a GAAP operating margin of approximately 13.0%–14.0% and a non-GAAP operating margin slightly above 22.5% in fiscal year 2025 [1].

The stock's decline reflects the market's concerns about Align Technology's ability to maintain its growth trajectory and manage operational costs effectively. Despite the challenges, the company's restructuring plan aims to improve operational efficiency and drive future growth.

References:
[1] https://investor.aligntech.com/news-releases/news-release-details/align-technology-announces-second-quarter-2025-financial-results