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Align Technology Expands Overseas; Currency Woes to Stay

On Sep 21, 2015, we issued an updated research report on California-based Align Technology Inc.ALGN , a developer of aligner therapy, intra-oral scanners and CAD/CAM (computer-aided design and computer-aided manufacturing) digital services.

Align Technology delivered an impressive performance in the second quarter of 2015, beating the Zacks Consensus Estimate on both revenues and earnings fronts. However on a year-over-year basis, while reported revenues witnessed modest growth, earnings faltered.

Moreoever, continued exposure to exchange rate fluctuations, owing to its extensive overseas business, poses a serious concern for the company in the near term. In fact, last quarter, the company witnessed a fall in average selling prices (ASPs) across all its customer channels due to this reason. Lower ASPs in turn brought down gross margin at the Clear Aligner segment substantially in the quarter.

Unfortunately, Align does not expect any respite from the ongoing foreign currency headwinds in the near term. We are also concerned about the country's ongoing economic uncertainty, which casts a shadow on Align's dental procedures, while the competitive landscape remains an overhang.

However, on the bright side, Align has high growth prospects, particularly in the international and North American orthodontists market. Last quarter, strong growth in Align's Invisalign (aligner therapy) volumes for doctors in the EMEA (Europe, Middle East and Africa) and Asia-Pacific region reflected high use of its products and expansion of its customer base.

Further, Align has been witnessing significant growth on the back of increased adoption of its aligner therapy by existing customers and higher demand from new trained doctors overseas. Last quarter, Invisalign case volume increased in double digit in both EMEA and Asia-Pacific regions.

Currently, Align carries a Zacks Rank #4 (Sell).

Key Picks in the Sector

Some better-ranked med-dental/supply stocks are CR Bard Inc. BCR , Laboratory Corp. of America Holdings LH and DENTSPLY International Inc. XRAY . All three stocks carry a Zacks Rank #2 (Buy).

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BARD C R INC (BCR): Free Stock Analysis Report

ALIGN TECH INC (ALGN): Free Stock Analysis Report

DENTSPLY INTL (XRAY): Free Stock Analysis Report

LABORATORY CP (LH): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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