Align Technology (ALGN) Up 6.4% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Align Technology (ALGN). Shares have added about 6.4% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Align Technology due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.ALGN Q3 Earnings and Revenue Beat, Margins CrashAlign Technology, Inc. (ALGN) delivered third-quarter 2025 adjusted earnings per share (EPS) of $2.61, up 11.1% from the year-ago level. The bottom line surpassed the Zacks Consensus Estimate by 10.1%.GAAP EPS for the quarter was 78 cents, reflecting a fall of 49.7% from $1.55 in the comparable period of 2024.ALGN’s Q3 RevenuesThe top line increased 1.8% year over year to $995.7 million, and surpassed the Zacks Consensus Estimate by 2.5%.Total revenues benefited from foreign exchange by approximately 1.6% year over year.Following the earnings announcement, ALGN stock rose 15.1% in after-market trading yesterday.ALGN’s Segments in DetailThe company has two reportable segments — Clear Aligner, and Imaging Systems and CAD/CAM Services (Systems and Services).Revenues in the Clear Aligner segment were up 2.4% year over year to $805.8 million.Clear Aligner revenues experienced a 1.6% year-over-year favorable foreign exchange impact.Revenues from Imaging Systems & CAD/CAM Services fell 0.6% to $189.9 million in the reported quarter. The segment, too, witnessed a favorable currency impact of 1.4% year over year.ALGN’s Q3 MarginsGross profit in the third quarter was $639.2 million, down 6.2% year over year. The gross margin contracted 552 basis points (bps) year over year to 64.2% due to an increase of 20.4% in the cost of net revenues.SG&A expenses fell 3.8% to $417.8 million, while R&D expenses rose 9.4% to $93.3 million.Operating income totaled $128.1 million, down 21.1% year over year. The operating margin contracted 374 bps to 12.9%.Financial Details of ALGNThe company exited the third quarter with cash and cash equivalents of $1.00 billion compared with $901.2 million at the end of the second quarter.Cumulative net cash provided by operating activities was $370 million compared with $452.1 million at the end of the third quarter of 2024.Stock RepurchaseDuring the reported quarter, the company repurchased approximately 0.5 million shares of common stock at an average price of $136.77 per share. These repurchases were made following the $200.0 million open market repurchase plan announced on Aug. 5, 2025, expected to be completed in January 2026.ALGN's OutlookAlign Technology provided its sales outlook for full-year 2025. It has also provided guidance for the fourth quarter of 2025.For the full year, ALGN expects Clear Aligner revenue growth to be flat to slightly up from 2024, assuming foreign exchange at current spot rates. The Zacks Consensus Estimate for 2025 revenues is pegged at $4.01 billion, suggesting 0.2% growth year over year.The GAAP operating margin is anticipated to range between 13.6% and 13.8% (earlier 13% and 14%). To support continued expansion, the company expects to invest $100 (earlier $100-$125 million) in capital expenditures, primarily related to technology upgrades. For the fourth quarter, ALGN anticipates worldwide revenues to be in the band of $1.03-$1.05 billion. The Zacks Consensus Estimate is pegged at $1.04 billion.How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a downward trend in estimates review.VGM ScoresAt this time, Align Technology has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a score of B on the value side, putting it in the second quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Align Technology has a Zacks Rank #3 (Hold). 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Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>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 report Align Technology, Inc. (ALGN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks