Align Earnings: Persistent Pricing Headwinds Suppress Aligner Growth Potential; Shares Still Cheap

Narrow-moat Align Technology reported fourth-quarter earnings that slightly missed our estimates. Total sales of $995 million were up 4% year over year but came in below our $1.0 billion forecast as the clear aligner segment ends the year on weak footing. After updating our model and whittling down our near-term assumptions, we lower our fair value estimate to $280 per share from $296. The market’s adverse reaction to the soft readout and worse-than-expected guidance sent shares falling about 6% after-hours, and we think shares are trading at an attractive price.