1. Align Technology, Inc. (NASDAQ:ALGN)
Year to Date Return as of September 16: -61.54%
Number of Hedge Fund Holders: 33
Align Technology, Inc. (NASDAQ:ALGN) is a leading medical device company that designs and manufactures 3D digital scanners and Invisalign clear aligners which are used in orthodontics. As of June 30, Bares Capital Management is the most prominent shareholder in Align Technology, Inc. (NASDAQ:ALGN) and owns more than 0.6 million shares of the company.
On July 27, Align Technology, Inc. (NASDAQ:ALGN) reported weak earnings for the second quarter of fiscal 2022. The company generated a revenue of $969.5 million, down 4% year over year, and missed estimates by $16.49 million. The company reported earnings per share of $2.0 and missed Wall Street expectations by $0.23. As of September 16, Align Technology, Inc. (NASDAQ:ALGN) has lost 61.54% since the beginning of 2022.
On September 9, Piper Sandler analyst Jason Bednar slashed his price target on Align Technology, Inc. (NASDAQ:ALGN) to $340 from $370 but maintained an Overweight rating on the shares.
At the end of the second quarter of 2022, 33 hedge funds were long Align Technology, Inc. (NASDAQ:ALGN) and held stakes worth $738 million in the company. This is compared to 45 hedge funds in the preceding quarter with stakes worth $1.20 billion.
RGAIA Investment Advisors mentioned Align Technology, Inc. (NASDAQ:ALGN) in its recently published second-quarter 2022 investor letter. Here is what the firm said:
“Align Technology (NASDAQ:ALGN)– we have followed Align with admiration for years. The company has consistently executed its combination of profitable growth, while disrupting the orthodontics industry and enhancing its offering beyond the pure product. Specifically, Align’s Invisalign is by far the best clear aligner and the company has used its offering to build what is essentially the “operating system” foran orthodontics practice. COVID Stimulus led to a surge in demand from which there is now a hangover.
Consequently Align is at its lowest valuation multiple in a decade (sub 15x EV/EBITDA); lower than when fears of a patent expiration led some to believe emergent competition could derail Align’s momentum (it did not). Align is more “discretionary” than the typical healthcare company, because their core clientele are adult patients with orthodontic problems. This means there is some portion of cyclicality; however, the really long-term opportunity is capturing the core teenager orthodontic industry, which remains the vast majority (over 80%) treated with metal braces.
It is inherently more challenging to drive adoption in this demographic considering invisible aligners are more expensive and require patient compliance, though we think the generation growing up seeing themselves on Instagram and TikTok will inevitably steer towards clear, where Align is dominant. As they say, the future here is bright.”
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