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Align Tech (ALGN)
NASDAQ:ALGN
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Align Tech
(NASDAQ:ALGN)
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Rating:76Outperform
Price Target:
$218.00
▲(14.68% Upside)
Action:ReiteratedDate:02/11/26
The score is driven primarily by strong financial quality (notably the low-leverage balance sheet and solid margins) and a generally positive earnings outlook with expected margin improvement. Technicals are supportive but somewhat overextended, while valuation remains a headwind due to a high P/E.
Positive Factors
Revenue growth and high gross margin
Sustained TTM revenue growth of ~45% alongside a ~70% gross margin signals structural demand and pricing power for Invisalign. High gross margins provide durable capacity to fund R&D, marketing and geographic expansion, supporting long-term profitability and reinvestment.
Very strong balance sheet and low leverage
Extremely low leverage and a high equity ratio give Align financial flexibility to fund scanner rollouts, product development, and opportunistic M&A without materially increasing refinancing risk. Stable ROE supports capital efficiency and resilience through cycles.
Expanding digital ecosystem and channel momentum
Growing iTero install base and new digital solutions deepen stickiness between scanners, software and aligner treatments, increasing conversion and lifetime value. Combined with strong DSO adoption, this reinforces recurring software/service revenue and structural competitive advantages.
Negative Factors
Weak free cash flow growth and cash conversion
Negative free cash flow growth and modest OCF conversion versus net income indicate weaker cash generation quality. Over months this constrains reinvestment cadence, limits internal funding for expansions or share returns, and raises sensitivity to capex or working capital shocks.
Decline in Systems & Services revenue
Falling Systems & Services sales, driven by lower scanner shipments, undermines recurring hardware/software revenue that feeds the ecosystem. A persistent decline would slow new practice onboarding, reduce cross-sell opportunities and weaken long-term unit economics.
North America retail channel challenges
Ongoing softness in Align's largest market suggests adoption, pricing or competitive pressures in the U.S. If persistent, this limits total addressable market growth and forces greater reliance on international or DSO channels, increasing geographic concentration risk.
Align Tech (ALGN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$13.64B
Dividend YieldN/A
Average Volume (3M)1.19M
Price to Earnings (P/E)33.6
Beta (1Y)1.33
Revenue Growth0.56%
EPS Growth-12.05%
CountryUS
Employees21,200
SectorHealthcare
Sector Strength45
IndustryMedical - Devices
Share Statistics
EPS (TTM)3.29
Shares Outstanding71,749,990
10 Day Avg. Volume1,119,956
30 Day Avg. Volume1,185,081
Financial Highlights & Ratios
PEG Ratio51.80
Price to Book (P/B)2.80
Price to Sales (P/S)2.81
P/FCF Ratio19.09
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue3.13
Enterprise Value/Gross Profit4.65
Enterprise Value/Ebitda18.31
Forecast
1Y Price Target
$201.70Price Target Upside6.10% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
EPS Forecast (FY)11.28
Revenue Forecast (FY)$4.19B
Align Tech Business Overview & Revenue Model
Company DescriptionAlign Technology, Inc., a medical device company, designs, manufactures, and markets Invisalign clear aligners and iTero intraoral scanners and services for orthodontists and general practitioner dentists, and restorative and aesthetic dentistry. It operates in two segments, Clear Aligner; and Scanners and Services. The Clear Aligner segment consists of comprehensive products, including Invisalign comprehensive treatment that addresses the orthodontic needs of teenage patients, such as mandibular advancement, compliance indicators, and compensation for tooth eruption; and Invisalign First Phase I and Invisalign First Comprehensive Phase 2 package for younger patients generally between the ages of seven and ten years, which is a mixture of primary/baby and permanent teeth. This segment's non-comprehensive products comprise Invisalign moderate, lite and express packages, and Invisalign go; and non-case products include retention products, Invisalign training fees, and sales of ancillary products, such as cleaning material, and adjusting tools used by dental professionals during the course of treatment. The Scanners and Services segment offers iTero scanner, a single hardware platform with software options for restorative or orthodontic procedures; restorative software for general practitioner dentists, prosthodontists, periodontists, and oral surgeons; and software for orthodontists for digital records storage, orthodontic diagnosis, and for the fabrication of printed models and retainers. This segment also provides computer-aided design and computer-aided manufacturing services; ancillary products, such as disposable sleeves for the wand; iTero model and dies; third party scanners and digital scans; Invisalign outcome simulator, a chair-side and cloud-based application for the iTero scanner; Invisalign progress assessment tool; and TimeLapse technology, which allows doctors or practitioners to compare a patient's historic 3D scans to the present-day scan. The company sells its products in the United States, Switzerland, China, and internationally. Align Technology, Inc. was incorporated in 1997 and is headquartered in Tempe, Arizona.
How the Company Makes MoneyAlign Technology generates revenue primarily through the sale of its Invisalign clear aligners, which account for a significant portion of its earnings. The company's revenue model is built on a direct sales approach to orthodontists and general dentists, who prescribe the aligners to patients. Align also earns income from the sale of iTero scanners and related software, which are used for digital impressions and treatment planning. Key revenue streams include the direct sales of aligners, scanner sales, and subscription fees from its software solutions. Additionally, Align Technology has established partnerships with dental professionals and organizations, enhancing its market presence and contributing to its revenue growth. Factors such as rising consumer demand for aesthetic dental treatments, the expansion of its product offerings, and increased adoption of digital dentistry also play a significant role in boosting the company's earnings.
Align Tech Key Performance Indicators (KPIs)
Any
Total Invisalign Cases Shipped Worldwide
Tracks the number of Invisalign cases shipped globally, reflecting market demand and the company's reach in the orthodontic market.
Tracks the number of Invisalign cases shipped globally, reflecting market demand and the company's reach in the orthodontic market.
Data provided by:
The Fly
The FlyAlign Tech Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call conveyed a broadly positive operational and financial position: record quarterly and annual revenues, record clear aligner volumes, strong DSO momentum, improved profitability (non-GAAP), and constructive 2026 guidance. Notable challenges include YoY GAAP gross margin pressure, ASP declines, North America retail softness, China procurement uncertainty, and early margin dilution from direct fabrication. On balance, the company reported more significant and material positive developments than negatives and reiterated disciplined execution and cautious optimism for 2026.Q4-2025 Updates
Positive Updates
Record Quarterly and Annual Revenues
Q4 revenues reached a record $1,048,000,000, up 5.3% year-over-year and 5.2% sequentially; fiscal 2025 revenues were a record $4,000,000,000, up 1.0% year-over-year.
Record Clear Aligner Volumes and Revenue
Fiscal 2025 clear aligner volumes were a record 2,600,000 cases, up 4.7% year-over-year; fiscal clear aligner revenues were $3,200,000,000, up 0.5% year-over-year. Q4 clear aligner volumes hit a record 677,000 cases, up 7.7% year-over-year, and Q4 clear aligner revenue was $838,100,000, up 5.5% year-over-year and 4.0% sequentially.
Strong Growth in Teens & Kids and DSP Touch-ups
A record 936,000 teens and kids started treatment in 2025, up 7.8% year-over-year. Total DSP touch-up cases shipped exceeded 136,000, up 36% versus 2024. Q4 teen and growing-kids starts were 230,000, up 7% year-over-year.
Improved Profitability and Margins
Fiscal 2025 non-GAAP operating margin was 22.7%, above outlook and the highest non-GAAP operating margin since 2021. Q4 non-GAAP operating margin was 26.1%, up 2.3 points sequentially and up 3.0 points year-over-year.
Systems & Services Momentum (iTero / Exocad)
Q4 systems and services revenue was $209,400,000, up 4.2% year-over-year and 10% sequentially. Lumina represented ~86% of full system units in the quarter and Exocad continued sequential/year-over-year revenue growth with pilots of ART in Europe.
Strong DSO Adoption and Channel Performance
DSOs represent ~25% of volume and remain high-growth partners; top 10 DSOs in The Americas grew double digits year-over-year with double-digit retention improvement, driving utilization and adoption across regions and channels.
Healthy Cash Position and Share Repurchases
Cash and cash equivalents were $1,094,900,000 as of 12/31/2025 (up $90.3M sequentially). The company repurchased ~2.9M shares in 2025 for $465.9M and has ~$831M remaining under the $1.0B repurchase program.
2026 Guidance and Confidence
Q1 2026 revenue guidance of $1,010,000,000–$1,030,000,000 (up 3%–5% YoY). Fiscal 2026 guidance: revenue growth of 3%–4% YoY, clear aligner volume growth mid-single digits, and non-GAAP operating margin target of ~23.7% (100 bps improvement YoY).
Negative Updates
Year-Over-Year Gross Margin Pressure (GAAP)
GAAP gross margin declined 4.8 percentage points year-over-year (Q4 overall gross margin 65.3%), driven primarily by higher depreciation expense on assets disposed of other than by sale and lower ASPs.
Clear Aligner Gross Margin and ASP Declines
Q4 clear aligner gross margin was 64.2%, down 6.0 points year-over-year and down 0.7 points sequentially. Q4 clear aligner average selling price was $1,240, down $25 year-over-year and down $5 sequentially, driven by higher discounts, mix shift to lower-price countries, higher net deferrals, and FX headwinds.
North America Retail Softness and Seasonal Headwinds
North America retail chains experienced ongoing softness and consumer pressure; while DSOs were strong, North America retail stability is improving but remains a challenge to sustain volume growth.
Sequential Decline in Case Starts After Strong Q3
Sequentially, Q4 case starts for teens and growing kids declined 9.8% (expected after an exceptionally strong Q3), indicating seasonality volatility in patient starts.
China VBP Uncertainty and Implementation Delays
Volume-based procurement (VBP) in China faces implementation delays and uncertainty; Q1 guidance does not include any VBP impact, but potential pricing changes and execution risk remain for the market where >85% of Align's business is private.
Margin Dilution from Early Direct Fabrication
Transition to direct 3D-printed fabrication is expected to be dilutive to margins during early production and scale-up in 2026, with accretion anticipated in later years (expected by 2027–2028).
Elevated Receivables and Longer DSO Payment Terms
Q4 accounts receivable was $1,101,800,000 with days sales outstanding of 94 days (up ~4 days YoY), reflecting flexible payment terms to support practices and adding near-term working capital pressure.
Company Guidance
Align provided Q1 2026 guidance for worldwide revenues of $1.01B–$1.03B (up ~3%–5% year‑over‑year), with clear aligner volume expected to rise mid single‑digits and average selling price up sequentially from favorable geographic mix, while Systems & Services revenue is expected to decline seasonally; Q1 GAAP operating margin is guided to 12.4%–12.8% and Q1 non‑GAAP operating margin to ~19.5%. For full‑year FY2026 the company expects revenue growth of 3%–4%, clear aligner volume growth up mid single‑digits, GAAP operating margin slightly below 18% (about a 400‑basis‑point improvement vs. 2025), non‑GAAP operating margin of ~23.7% (≈100 bps improvement), and capital expenditures of $125M–$150M; the outlook assumes no material adverse changes from foreign exchange, macroeconomic conditions or duties/tariffs and does not assume any impact from China VBP.Align Tech Financial Statement Overview
Summary
Strong overall fundamentals supported by a very conservative balance sheet (very low leverage and sizable equity) and solid gross margins. Recent results show revenue re-acceleration and improved free-cash-flow conversion, but profitability is below prior peaks and cash flow has been historically volatile.Income Statement
Revenue has been resilient with a strong rebound year in 2025 (annual revenue growth of 131%), but profitability has softened versus the 2021 peak: net margin is ~10% in 2025 versus ~20% in 2021. Gross margins remain strong (high-60% to low-70% range), supporting good underlying unit economics, but operating profitability looks less consistent (including an apparent 2025 EBIT margin data inconsistency vs positive EBIT/EBITDA). Overall: solid margin profile and recovery in growth, but weaker bottom-line efficiency vs prior highs and some volatility year-to-year.74
Positive
Balance Sheet
The balance sheet is a clear strength: leverage is very low (debt-to-equity ~2% in 2025) and equity is sizable (~$4.0B), providing flexibility and downside protection. Returns on equity are healthy (~10% in 2025) though down meaningfully from prior peak levels, reflecting reduced profitability rather than balance-sheet strain. Overall: conservatively financed with strong capital base; the main watch item is ROE compression versus earlier years.92
Very Positive
Cash Flow
Cash generation is generally healthy: operating cash flow was ~$593M in 2025 and free cash flow matched operating cash flow, with free cash flow running at about 100% of net income in 2025 (improved quality of earnings vs earlier years). However, cash flow has been choppy historically (notably weaker free cash flow in 2022), and cash conversion as shown by operating cash flow relative to revenue remains moderate (~31% in 2025). Overall: good recent conversion and rebound, but a track record of variability.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 4.03B | 4.00B | 3.86B | 3.73B | 3.95B |
| Gross Profit | 2.76B | 2.80B | 2.71B | 2.63B | 2.94B |
| EBITDA | 796.80M | 816.80M | 799.05M | 779.84M | 1.09B |
| Net Income | 410.35M | 421.36M | 445.05M | 361.57M | 772.02M |
Balance Sheet | |||||
| Total Assets | 6.23B | 6.21B | 6.08B | 5.95B | 5.94B |
| Cash, Cash Equivalents and Short-Term Investments | 1.09B | 1.04B | 972.74M | 999.58M | 1.17B |
| Total Debt | 82.51M | 119.28M | 126.62M | 126.91M | 125.38M |
| Total Liabilities | 2.18B | 2.36B | 2.45B | 2.35B | 2.32B |
| Stockholders Equity | 4.05B | 3.85B | 3.63B | 3.60B | 3.62B |
Cash Flow | |||||
| Free Cash Flow | 593.22M | 622.65M | 608.06M | 276.83M | 771.45M |
| Operating Cash Flow | 593.22M | 738.23M | 785.78M | 568.73M | 1.17B |
| Investing Cash Flow | -112.44M | -254.91M | -195.94M | -213.32M | -563.43M |
| Financing Cash Flow | -464.58M | -355.72M | -598.34M | -501.69M | -458.33M |
Align Tech Technical Analysis
Positive
190.10
Price Trends
171.78
Positive
156.25
Positive
160.26
Positive
Market Momentum
5.44
Positive
60.46
Neutral
72.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALGN, the sentiment is Positive. The current price of 190.1 is above the 20-day moving average (MA) of 182.84, above the 50-day MA of 171.78, and above the 200-day MA of 160.26, indicating a bullish trend. The MACD of 5.44 indicates Positive momentum. The RSI at 60.46 is Neutral, neither overbought nor oversold. The STOCH value of 72.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALGN.
Align Tech Risk Analysis
Align Tech disclosed 33 risk factors in its most recent earnings report. Align Tech reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Align Tech Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $12.89B | 24.27 | 10.01% | ― | 11.75% | 364.73% | |
76 Outperform | $13.64B | 33.59 | 10.39% | ― | 0.56% | -12.05% | |
69 Neutral | $15.66B | 32.64 | 9.20% | 2.28% | 5.78% | 61.52% | |
69 Neutral | $1.62B | 24.00 | 17.82% | ― | 29.47% | 23.24% | |
65 Neutral | $19.26B | 27.74 | 5.60% | 1.05% | 5.47% | -23.03% | |
60 Neutral | $6.99B | -36.81 | -26.38% | ― | 30.38% | 47.64% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
ALGN
Align Tech
190.10
15.01
8.57%
SNN
Smith & Nephew Snats
36.90
7.95
27.44%
UFPT
Ufp Technologies
210.58
-4.66
-2.17%
ZBH
Zimmer Biomet Holdings
98.44
-5.91
-5.66%
GMED
Globus Medical
95.46
16.21
20.45%
GKOS
Glaukos
120.40
11.25
10.31%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.