Align Technology, Inc.ALGN is set to report third-quarter 2018 results on Oct 24, after market close.
Last quarter, the company posted a positive earnings surprise of 19.3%. Align Technology has outperformed the Zacks Consensus Estimate in all of the preceding four quarters, the average positive earnings surprise being 21.5%.
Let's take a look at how things are shaping up prior to this announcement.
Invisalign System - Major Growth Driver
Align Technology is expected to gain from continued adoption of Invisalign Technology in the third quarter of 2018. The company projects Invisalign case shipments in the band of 302,000-307,000, up 28-30% from a year ago.
In May, Align Technology announced the opening of its first Invisalign treatment planning facility in Europe. This apart, the company announced the addition of Invisalign First clear aligners for treatment of younger patients with early mixed dentition. The company initiated the commercial launch of the offering for Invisalign-trained doctors in the United States, Canada, Australia, New Zealand, Japan, and the Europe, Middle East and Africa (EMEA) regions in July 2018.
At the same time, the company expanded its Invisalign clear aligner range with the latest launch of Vivera Retainers with Precision Bite Ramps. The rate of deep bite malocclusion cases is mostly high in North America and EMEA regions, with 45% of total patients being attributed to these regions.
Notably, the Vivera retainers with Precision Bite Ramps have been made available to Invisalign-trained providers in the Asia Pacific, North America and EMEA regions. Further, the company has been focusing on driving Invisalign utilization among orthodontists.
Align Technology, Inc. Price and EPS Surprise
Align Technology, Inc. Price and EPS Surprise | Align Technology, Inc. Quote
Based on these developments, we expect top-line contributions from the Invisalign system to show a considerable rise in the to-be-reported quarter results.
Scanner and Service Business Solid
Align Technology has been raking in strong revenues from the Scanner and Service business over the past few quarters. Moreover, the company has been seeing increased adoption of iTero scanners for Invisalign case submissions instead of PVS impressions, especially in North America. Management expects this trend to reflect in the company's third-quarter results.
In a bid to strengthen this business, Align Technology announced the expansion of the iTero Element portfolio with the launch of iTero Element 2 and iTero Element Flex scanners in the United States and the majority of European countries, including France, Germany, Italy, Spain, and the United Kingdom.
The company is also gaining from the adoption of iTero platform by dental service organizations or DSO partners. During the second quarter, Heartland Dental continued to roll out iTero scanners across their U.S. supported locations. Per Align Technology, Heartland Dental further plans to install scanners in 90% of supported offices by 2018-end. Moreover, Aspen Dental initiated the rollout of iTero scanners in third-quarter 2018 for the next two quarters.Align Technology also announced the receipt of approval from the China Food and Drug Administration to commercialize the iTero Element intraoral scanner in China.
Thus, we expect a solid show from the Scanner and Service business in the to-be-reported quarter.
Overall, Align Technology projects EPS of $1.13-$1.18 on revenues of $493-$503 million for the third quarter of 2018. The Zacks Consensus Estimate for revenues of $501.1 million indicates a rise of 30.1% from a year ago.
What Our Quantitative Model Suggests
Per the proven Zacks model, a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP . You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Align Technology has a Zacks Rank #4 (Sell) and has an Earnings ESP of +0.21%, a combination that does not conclusively show an earnings beat for Align Technology.
The Zacks Consensus Estimate for earnings of $1.19 reflects a 17.8% rise on a year-over-year basis.
Notably, we caution you against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat in the to-be-reported quarter.
Baxter International Inc BAX has an Earnings ESP of +0.90% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .
Thermo Fisher Scientific Inc. TMO carries a Zacks Rank #3 and has an Earnings ESP of +0.48%.
Myriad Genetics, Inc. MYGN has an Earnings ESP of +1.42% and a Zacks Rank #3.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportThermo Fisher Scientific Inc. (TMO): Free Stock Analysis ReportBaxter International Inc. (BAX): Free Stock Analysis ReportMyriad Genetics, Inc. (MYGN): Free Stock Analysis ReportAlign Technology, Inc. (ALGN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research