The third-worst S&P 500 stock of 2022 is the second-best of 2023 so far, having doubled its price from a 52-week low hit in November
Align Technology Inc. shares rallied Thursday, making one of the worst stocks of 2022 among the best of 2023 so far.
Align ALGN, +27.38% surged as much as 30% to an intraday high of $368.87, making it the best-performing stock on both the S&P 500 SPX, +1.47% and the Nasdaq 100 NDX, +3.56% Thursday, with Meta Platforms Inc. META, +23.28% running a close second. Thursday’s gains put Align on track for the stock’s largest percent increase since Oct. 22, 2020, when it rose 35%, according to Dow Jones data.
Align, the maker of Invisalign teeth straighteners, was the third-worst S&P 500 stock of 2022, but after a 28% gain in January, it is now up more than 70% year to date, the second-best gain of 2023 for an S&P 500 stock after Lucid Group Inc.’s LCID, +1.90% 84% gain. Align’s stock has now doubled from its 52-week low of $174.58, which it hit on Nov. 9, 2022.
Rival SmileDirectClub Inc. SDC, +10.51% shares also got swept up in the rally, with the stock price surging as much as 17% Thursday. SmileDirectClub plans to release earnings on Feb. 28.
The move comes as Align shows signs of a turnaround and a return to sales-volume growth after more than a year of declines. Align’s quarterly results topped Wall Street estimates Wednesday, and executives forecast sequentially flat revenue, which also was better than analysts had expected.
Morgan Stanley analyst Erin Wright, who has an overweight rating and a $314 price target, said “the jury is still out” on whether the company has hit an inflection point, but she noted that “shares should grind higher” on the company’s first sequential volume increase in five quarters.
While Wright considered the first-quarter guidance “light,” the analyst said Align’s management suggested sequential improvement in sales volume and margins in 2023, offering “a glimpse of stability.”
Stifel analyst Jonathan Block, who has a buy rating and a $375 price target, said the resumption of growth was the “standout” of the fourth quarter for Align as execs pointed to a 1% increase quarter to quarter in volume and a 7% increase in adult braces.
“While we did not expect Align to recapture [quarter-over-quarter] case-volume growth this quarter (we had this returning [in the second quarter of 2023]), our recent checks identified an improvement in N.A. relative to prior surveys supported by our consistent longitudinal diligence,” Block said.
Of the 12 analysts who cover Align, nine have buy-grade ratings, two have holds and one has a sell, along with an average target price of $313.37, according to FactSet data.