Align (NASDAQ: ALGN) Continues To Impress As It Crosses The $500 Mark

It’s not even two months since shares of Align Technology (NASDAQ: ALGN) were still trading 15% below their all-time highs set back in 2018. To be sure, the San Jose based orthodontics company was still having a good year, with shares up 170% since March. However, few saw the $400 mark, let alone the $500 mark, being broken this side of 2021.

But sometimes a company’s earnings report comes out of left field and a stunned Wall Street is forced to quickly reevaluate their stock. That’s exactly what happened with Align back in late October when they reported their Q3 numbers. Analysts had been expecting EPS to come in at a respectable $0.46 but were left speechless with a print of $1.76. It’s not every day you see a $20 billion company beat earnings by nearly 300%, but that wasn’t all. Revenue was 30% higher than the consensus and up 20% on the year while the company’s margins also knocked it out of the park.

Unsurprisingly, shares quickly became red hot. They gapped up 26% on the next day’s open and haven’t looked back since. Yesterday’s session saw them close at fresh all-time highs, up about 50% from the day before October’s numbers were released, and sitting pretty with a print of $500 per share.

New Habits Look Good

It’s a far cry from the company that was fast establishing a dirty habit of breaking investor’s hearts on an annual basis. Having previously peaked just below the $400 mark in September 2018, shares were down 50% a month later. They lost half their value again in just three weeks the next summer and with the onset of COVID this past spring, that made it three years in a row of 50% drops. Wall Street can quickly lose patience with companies who make bad habits like that and it was starting to look like Align was destined to become a disappointment like their teledentistry cousins SmileDirectClub (NASDAQ: SDC).

But poetically, while it was poor earnings that precipitated each of those big drops in recent years, it’s been knockout earnings that have driven shares up to where they are now. And there are plenty of reasons to think that this wasn’t just a flash in the pan either.

Red Hot Momentum Into 2021

As CEO Joe Hogan summed up at the time; their earnings show “strong momentum across all regions and customer channels for both Invisalign clear aligners and iTero scanner and services. Capping off our record quarter is the achievement of our 9 millionth Invisalign patient milestone. We also saw a strong response to our new teen and mom-focused consumer campaign with 118% year-over-year increase in total leads and a 25.6% year over year increase in teenagers using Invisalign clear aligners. Our overall revenue momentum has continued into October and we are encouraged by positive feedback from Invisalign providers regarding the benefits of digital orthodontics starting with an iTero scanner for Invisalign treatment - especially in this COVID-19 environment.”

So while it may have been a while coming, it looks like the COVID cloud has finally shown a silver lining for Align and investors are only too happy to buy into the narrative. With that kind of momentum, it’s hard to see the current rally losing steam anytime soon which means $500 will become the new normal and a definite area of support during any future dips.