Digital Workflow Improvements And Market Weakness Will Shape The Coming Year

Key Takeaways

• Expansion into new clinical segments and broader international adoption are set to significantly boost long-term revenue and earnings growth.
  
• Investments in digital technology, automation, and targeted consumer strategies will enhance operational efficiency, margins, and competitive differentiation.
  
• Macroeconomic challenges, shifting treatment preferences, lower-priced product mix, constrained equipment demand, and heightened competition are pressuring margins and limiting Align's revenue and earnings growth.

Catalysts

Designs, manufactures, and markets Invisalign clear aligners, Vivera retainers, and iTero intraoral scanners and services in the United States, Switzerland, and internationally.

• Demand for Invisalign remains robust across international markets-especially in APAC, EMEA, and Latin America-where rising incomes and a growing middle class are increasing access to discretionary dental procedures; as consumer confidence returns, this pent-up global demand is likely to accelerate revenue growth.
  
• The continued expansion of clinical indications for Invisalign (such as Invisalign First for teens/kids and palate expanders) and the increasing adoption by general practitioner dentists are broadening Align's addressable market, positioning the company for higher long-term revenues and double-digit earnings growth as these new segments mature.
  
• Strategic investments in digital workflow and next-generation manufacturing (automation, regionalized production, modernization of facilities) are expected to drive operational efficiencies and cost reductions, supporting higher net margins and improved operating leverage in fiscal 2026 and beyond.
  
• The integration of advanced digital solutions-such as iTero Lumina scanners, AI-driven treatment planning, and piloting x-ray diagnostics integration-will enhance differentiation, support premium pricing, and improve patient treatment outcomes, ultimately benefiting both revenues and long-term earnings quality.
  
• Align's commitment to direct-to-consumer engagement and targeted marketing programs (especially in digital channels and emerging direct provider relationships like DSOs) is poised to accelerate patient conversion rates and expand global adoption, driving sustained revenue and earnings growth as market conditions stabilize.

Align Technology Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Align Technology's revenue will grow by 4.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from 11.0% today to 14.9% in 3 years time.
• Analysts expect earnings to reach $674.8 million (and earnings per share of $9.55) by about September 2028, up from $437.6 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.6x on those 2028 earnings, up from 22.5x today. This future PE is lower than the current PE for the US Medical Equipment industry at 29.7x.
• Analysts expect the number of shares outstanding to decline by 2.9% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.42%, as per the Simply Wall St company report.

Align Technology Future Earnings Per Share Growth

Risks

• Persistent macroeconomic uncertainty-including global tariff volatility, inflation, high interest rates, and weak consumer confidence-is contributing to reduced patient traffic, fewer orthodontic case starts, and lower acceptance rates for elective clear aligner treatments, challenging Align's future revenue growth.
  
• A multi-year trend of declining orthodontic case starts in developed markets and a notable shift by orthodontists towards traditional metal braces (wires and brackets) in times of uncertainty indicate secular demand headwinds, which may pressure aligner volumes and revenues in the long term.
  
• Product mix is moving towards lower-priced, noncomprehensive aligner products and increased sales in emerging markets where product pricing is structurally lower, driving down clear aligner average selling prices (ASPs) and putting downward pressure on net margins and total earnings.
  
• Reluctance among dental practices to invest in new capital equipment due to weaker patient traffic and subdued demand is constraining sales of higher-margin scanner systems and shifting revenues toward less profitable upgrade parts, limiting potential margin expansion.
  
• Intensifying pricing discounting, continued competitive pressure from both traditional braces and regional clear aligner competitors, and increased restructuring/cost-saving initiatives signal a challenging operating environment, raising the risk of compressed operating margins and lower sustainable earnings, especially if top-line growth remains muted.

Valuation

• The analysts have a consensus price target of $186.357 for Align Technology based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $220.0, and the most bearish reporting a price target of just $140.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.5 billion, earnings will come to $674.8 million, and it would be trading on a PE ratio of 22.6x, assuming you use a discount rate of 7.4%.
• Given the current share price of $135.93, the analyst price target of $186.36 is 27.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.