Align Technology (ALGN): Assessing Valuation After Q2 Revenue Miss and Legal Scrutiny Spurs Investor Uncertainty

Align Technology (ALGN) is back in the spotlight after a series of tough headlines for investors to consider. The company recently reported a revenue miss for the second quarter of 2025 and sharply reduced its growth outlook for the rest of the year, directly linking the guidance cut to economic uncertainty and softer demand. Almost immediately, multiple law firms launched investigations into possible securities law violations, which has unsettled some shareholders and captured Wall Street’s attention. For investors deciding what to do next, this combination of disappointing results and legal scrutiny puts some clear decisions on the table.

The stock’s reaction has been swift. Shares tumbled nearly 37% in just two days after the lower guidance was unveiled. Even before this, Align Technology’s stock struggled, trailing the broader market with a 35% loss over the past year and almost 50% over five years. The momentum that once carried ALGN during the pandemic recovery has faded. Recent financials and lingering legal threats add to the market’s unease about how far earnings power might slip.

With the share price now sitting at a steep discount to some valuation models, investors have to ask whether Align Technology is undervalued after this drop or if the market is correctly pricing in weaker growth for the foreseeable future.

Most Popular Narrative: 19.7% Undervalued

According to the community narrative, Align Technology is seen as significantly undervalued based on forward-looking revenue and earnings growth expectations. Analysts project a fair value that is notably above current trading levels.

The continued expansion of clinical indications for Invisalign, such as Invisalign First for teens and kids and palate expanders, and the increasing adoption by general practitioner dentists are broadening Align's addressable market. This positions the company for higher long-term revenues and double-digit earnings growth as these new segments mature.

How are analysts arriving at this optimistic target? The reasoning behind this narrative is a unique blend of rising global adoption, ambitious earnings projections, and a premium profit multiple. The question remains whether Align’s digital workflows and emerging market expansion will deliver the growth predicted in this scenario. The real story is in the numbers, and it could surprise even seasoned investors.

Result: Fair Value of $186.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing macroeconomic pressures and a shift toward lower-priced products could limit Align’s revenue and earnings growth. This may challenge the optimistic outlook.

Find out about the key risks to this Align Technology narrative.

Another View: DCF Model Points to Even Deeper Value

While analyst targets suggest Align Technology is undervalued, our DCF model provides a different perspective and indicates that shares could be priced even lower than their true worth. Which yardstick gives the real signal?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Align Technology for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Align Technology Narrative

If you see things differently or want to dig into the numbers on your own, you can create your personal narrative in just a few minutes. So why not do it your way?

A great starting point for your Align Technology research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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