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Investing.com - Morgan Stanley (NYSE:MS) downgraded Align Technology (NASDAQ:ALGN) from Overweight to Equalweight on Thursday, while significantly lowering its price target to $154.00 from $249.00. According to InvestingPro data, the stock, currently trading at $203.57, appears undervalued based on its Fair Value analysis.
The downgrade follows what Morgan Stanley described as a "shortfall and guidance reduction" from the clear aligner manufacturer, which the firm noted came shortly after Align’s "relatively positive investor day" held in May. Despite these concerns, the company maintains a robust gross margin of 70% and has demonstrated revenue growth of 1.64% over the last twelve months.
Morgan Stanley expressed concern about near-term growth prospects and questioned the achievability of Align’s recently stated long-range plan presented during its May investor event.
The investment bank cited evolving competitive dynamics in the clear aligner market as an additional risk factor for Align Technology, referencing its AlphaWise survey work that indicated some competitor inroads in the space.
Morgan Stanley also reduced its 2025 earnings per share estimate for Align to $10.18 from $10.38, attributing the cut largely to "a sustained lackluster backdrop in Dental impacting clear aligner demand." The broader analyst community maintains price targets ranging from $180 to $275, reflecting the market’s mixed outlook on the stock.
In other recent news, Align Technology reported its Q2 2025 earnings, which did not meet analysts’ expectations. The company’s earnings per share (EPS) were reported at $2.49, falling short of the anticipated $2.57. Additionally, revenue was $1.012 billion, below the projected $1.06 billion. Following these results, Stifel lowered its price target for Align Technology from $275.00 to $200.00, although they maintained a Buy rating on the stock. The reduction in the price target was attributed to disappointing quarterly results, including a decline in Invisalign case volume and weaker revenue. Stifel highlighted that while consumer interest remained high, conversion rates were poor, particularly in June. These developments have prompted investors to closely monitor the company’s performance and future strategies.
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