Align Technologies Inc. shares rallied Thursday, making one of the worst stocks of 2022 one of the best in 2023 so far.
Align ALGN,
surged as much as 30% to an intraday high of $368.87, making it the best performing stock on both the S&P 500 index SPX,
and the Nasdaq-100 NDX,
Thursday, with Meta Platforms Inc. META,
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 for second best gain of 2023 for an S&P 500 stock, second only to Lucid Group Inc.’s LCID,
an 84% gain. The stock has now doubled from its 52-week low of $174.58, which was reached on Nov. 9, 2022.
Rival SmileDirectClub Inc. SDC,
shares also got swept up in the rally, with the stock price surging as much as 17% Thursday. SmileDirect plans to release earnings on Feb. 28.
The move comes as Align showed 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 was also 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 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 q/q case volume growth this quarter (we had this returning 2Q23), our recent checks identified an improvement in NA 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.
.