Bearish Tech stock to watch: Align Technology, Inc. (NASDAQ: ALGN)

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Align Technology, Inc. (NASDAQ: ALGN) stock fell 2.9% on 30th January, 2020 (as of 11:13 am GMT-5; Source: Google finance) after the company reduced the first-quarter expectations because of the coronavirus threat. The company has reported fourth-quarter net income of $121.3 million, compared to $97.4 million, in the year-ago period. As of December 31, 2019, ALGN had $868.6 million in cash, cash equivalents and marketable securities compared to $744.5 million as of December 31, 2018.

ALGN in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.53, while adjusted revenue growth of 21.7 percent to $649.79 million in the fourth quarter of FY 19. Q4’19 clear aligner revenues were up 22.0% year-over-year to $543.6 million, and Q4’19 scanner and services revenues were up 20.2% year-over-year to $106.2 million. Q4’19 Invisalign volume was 413.7 thousand cases, which is up 23.9% year-over-year.

Moreover, For the Americas and International regions, Q4’19 Invisalign volume was up 19.3% and 30.1% year-over-year, respectively. Q4’19 Invisalign volume for teenage patients was up 33.1% year-over-year to 116 thousand cases. Q4’19 operating income was up 25.5% year-over-year to $151.2 million resulting in an operating margin of 23.3%.

Additionally, in Q4’19, the company had repurchased approximately 389K shares of the common stock at an average price of $258.67 per share and have $100 million remaining available for repurchase under the May 2018 Repurchase Program.

The company expects first-quarter earnings to be in the range of $18.65 to $18.74 a share, including a $17.70 a share for a one-time tax benefit. The company expects first-quarter revenue to be in the range of $615 million to $630 million. Align said that because of coronavirus concerns it is forecasting lower revenue for China, which is the company’s largest market and represents about 8% of its total revenue. Further, for Q1’20, the company’s outlook reflects approximately 20,000 to 25,000 fewer Invisalign case shipments and approximately $30 million to $35 million less revenues for Invisalign and iTero products sold in China. The company will also be absorbing $3 million to $4 million in idle China plant capacity costs which we expect will result in approximately a 0.5% gross margin impact. In addition, for the first quarter 2020, the company expects Non-GAAP operating margin to be in the range of 19.5% to 20.5%.

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