Shares of Align Technology (ALGN) were in focus after Morgan Stanley said that results from a survey of dentists and orthodontists were negative for Align.
SURVEY NEGATIVE FOR ALIGN: In a research note to investors, Morgan Stanley analyst Steve Beuchaw said that the firm surveyed 30 dentists and 42 orthodontists in the U.S. in the fourth quarter to assess aligner adoption and market share. The survey indicated slower aligner mix shift and emerging share movements, both of which are negative for Align Technology, the analyst said. Beuchaw said that such findings suggest that the company's U.S. business will slow by over 1000 bps in 2019, and noted that the survey was run in advance of the full launch of competing products from 3M (MMM), Danaher (DHR), and Dentsply Sirona (XRAY). Market share views are likely to trend lower in 2019 and beyond, the analyst added. Given the finding, Beuchaw said he cut his U.S. volume estimates for Align by 400 bps for 2019 and cut his price target on the stock to $210 from $300 to account for lower estimates and a lower market multiple. He maintained an Equal Weight rating on the stock.
POSITIVE FOR STRAUMANN: Meanwhile, the Morgan Stanley analyst said that the survey was positive for Straumann (STMN), which is covered by Michael Jungling. While investors tend to focus on new entrants from the other three competitors, ClearCorrect with support from Straumann was the bigger share winner prospectively in the survey, Beuchaw said.
WHAT'S NOTABLE: Earlier this week, Baird analyst Jeff Johnson cut his price target on Align to $255 from $300 as he became more cautious on the space due to the combination of the dental sector's secular overhangs, softer Q4 patient volume checks, and accelerating equipment pricing pressures. The analyst reaffirmed his Outperform rating on the stock, citing its big addressable market, reasonable valuation, and solid Invisalign December survey data.
PRICE ACTION: In afternoon trading, Align Technology shares are up nearly 2/5% to $189.32.
Align Technology
+4 (+2.17%)
3M
+7.45 (+4.06%)
Danaher
+3.49 (+3.58%)
Dentsply Sirona
+1.64 (+4.33%)
Straumann
+ (+0.00%)