Align Technology painted a "rosy vision" for 2023, an analyst said Thursday, as ALGN stock launched to its highest point since April.
The Invisalign maker expects first-quarter sales to be flat sequentially and didn't provide an outlook for the full year. Align noted the macro-environment remains fragile with continued global challenges and uncertainty. But there are signs of stability ahead, the company said.
Evercore ISI analyst Elizabeth Anderson called the approach prudent, allowing Align to reset longer-term expectations once the environment settles. Sales of the clear, plastic teeth-straighteners known as Invisalign have struggled amid the pandemic and particularly due to stringent measures in China.
"Although 2023 will likely continue to have volatile momentums, barring a macro implosion, 2024 revenue should be higher vs. 2021 and should support at least a midteens growth rate," she said in a note to clients. Growth could be higher "but we need teens growth to return to being additive."
In response, ALGN stock catapulted 27.4% to close at 359.88 on today's stock market.
ALGN Stock: First-Quarter Shaky
During the December quarter, adjusted Align earnings came in at $1.73 per share. On a year-over-year basis, earnings skidded 39%. But Align noted they grew 6% sequentially. Sales also toppled 12.6% to $901.5 million. Quarter over quarter, revenue rose 1.3%.
Both measures topped forecasts. Earnings were 20 cents ahead of ALGN stock analysts' expectations, according to FactSet. The Street also projected a steeper sales dive to $891.8 million.
Evercore's Anderson called the report "better than feared." She raised her price target on ALGN stock to 375 from 230. Align called out strength from the North America and Europe-Middle East-Africa markets.
But first-quarter guidance calls for the volume of Invisalign shipments to be down sequentially due to weakness in China from Covid. Average sales prices of the clear aligners, on the other hand, are expected to increase sequentially.
"Although first-quarter demand looks to be down, there is some seasonality in those numbers and it seems likely that barring a full-blown recession, a bottom has formed in terms of volumes," UBS analyst Kevin Caliendo said in a note. "What is less clear is the slope of the recovery."
Caliendo kept his buy rating and 225 price target on ALGN stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
