It has been about a month since the last earnings report for Align Technology (ALGN). Shares have lost about 1.6% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Align Technology due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
ALGN Q1 Earnings and Revenues Beat, Margins Rise
Align Technology, Inc. (ALGN) reported first-quarter 2026 non-GAAP earnings of $2.58 per share, which rose 21.1% year over year and beat the Zacks Consensus Estimate by 14.41%. Total revenues of $1.04 billion increased 6.2% from the year-ago quarter and beat the consensus mark by 1.81%.
The results were supported by record Invisalign clear aligner shipments of 685.7 thousand cases, up 6.7% year over year, reflecting double-digit growth in EMEA, APAC and Latin America and continued stability in North America.
ALGN’s Clear Aligner Strength Drives Top-Line Growth
Clear Aligner revenues rose 7.4% year over year to $856.0 million, supported by higher volumes and increased average selling prices. Management also attributed the year-over-year increase to favorable foreign exchange, price actions and lower net deferrals, partially offset by higher discounts and a mix shift toward lower-priced countries and products.
On the demand side, shipments to orthodontists and GP dentists increased 7.4% and 5.6%, respectively, year over year. By patient cohort, Invisalign adult shipments increased 7.8% year over year, while teen and kid patients improved 4.8%, aided by continued adoption of Invisalign First, the Invisalign Palatal Expander and mandibular advancement with occlusal blocks.
Align Sees Mixed Scanner Seasonality, Solid Year-Over-Year Gain
Imaging Systems and CAD/CAM Services revenues increased 0.9% year over year to $184.1 million. However, the segment’s sale declined sequentially as first-quarter capital equipment seasonality weighed on results.
Management noted that the number of scanners sold to new doctors increased by double digits year over year, while the installed base of active scanners exceeded 125,000 globally during the quarter. The company highlighted double-digit year-over-year revenue growth for exocad, reinforcing its strategy to integrate orthodontics and restorative dentistry workflows.
ALGN’s Margins Improve Y/Y, Legal Costs Hit Expenses
First-quarter gross margin expanded 160 basis points (bps) year over year to 70.8%, primarily reflecting operational efficiencies and higher Clear Aligner ASP. The company noted foreign exchange was an unfavorable 0.4-point headwind to gross margin on a year-over-year basis. On a non-GAAP basis, gross margin was 71.8%, also up 160 bps.
Operating expenses increased 8.3% year over year to $594.6 million, caused mainly by legal settlement costs and higher employee compensation. GAAP operating margin improved 20 bps year over year to 13.6%, while non-GAAP operating margin expanded 240 bps to 21.5%, reflecting the benefit of excluding items, such as stock-based compensation and legal settlement costs.
ALGN’s Cash Flow Rises, Buybacks Stay in Focus
ALGN ended the quarter with $1.06 billion in cash and cash equivalents compared with $1.09 billion at the end of 2025. Operating cash flow totaled $151.0 million in the quarter, and free cash flow was $120.3 million after $30.8 million of capital expenditures, largely tied to investments in manufacturing capacity and facilities.
Regarding capital allocation, the company said it finished its earlier $200 million stock repurchase program between August 2025 and January 2026, with $800 million still available under its $1.0 billion authorization as of March 31, 2026. The company further disclosed plans for an additional share buyback of up to $200 million over a six-month period beginning on or about May 1, 2026.
ALGN Reaffirms 2026 View, Sets Q2 Revenue Range
For full-year 2026, Align reaffirmed its outlook for worldwide revenue growth of 3-4% year over year and Clear Aligner volume growth in the mid-single digits. The Zacks Consensus Estimate for 2026 revenues is currently pegged at $4.18 billion, implying 3.5% growth. The company continues to expect GAAP operating margin slightly below 18.0% and a non-GAAP operating margin of about 23.7%, along with capital expenditures of $125-$150 million.
For the second quarter of 2026, management expects worldwide revenues of $1.040-$1.060 billion, up about 3-5% year over year. The Zacks Consensus Estimate for the metric projects 3.8% growth to $1.05 billion. The company forecasts sequential and year-over-year growth in Clear Aligner volume, with ASP expected to stay flat on both a sequential and annual basis. Systems and Services revenues are expected to rise sequentially.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Align Technology has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a score of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates 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 #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Align Technology belongs to the Zacks Medical – Dental Supplies industry. Another stock from the same industry, West Pharmaceutical Services (WST), has gained 8.1% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.
West Pharmaceutical reported revenues of $844.9 million in the last reported quarter, representing a year-over-year change of +21%. EPS of $2.13 for the same period compares with $1.45 a year ago.
For the current quarter, West Pharmaceutical is expected to post earnings of $2.08 per share, indicating a change of +13% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for West Pharmaceutical. Also, the stock has a VGM Score of F.
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This article originally published on Zacks Investment Research (zacks.com).
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