Why Align Technology (ALGN) Shares Are Up Today

NEW YORK (TheStreet) -- Align Technology (ALGN) was gaining 4.6% to $56.04 after the International Trade Commission affirmed that ClearCorrect infringed five of the Invisalign maker's patents.

The ITC affirmed the Administrative Law Judge's Initial Determination that ClearCorrect infringed five patents related to software used to make transparent dental braces. The judge issued a cease-and-desist order against ClearCorrect, though the full orderand the commission's opinion are not yet available to the public or any parties involved.

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TheStreet Ratings team rates ALIGN TECHNOLOGY INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALIGN TECHNOLOGY INC (ALGN) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 24.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ALGN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.76, which clearly demonstrates the ability to cover short-term cash needs.
  • ALIGN TECHNOLOGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, ALIGN TECHNOLOGY INC increased its bottom line by earning $0.77 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($1.74 versus $0.77).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 343.8% when compared to the same quarter one year prior, rising from $9.56 million to $42.42 million.
  • The gross profit margin for ALIGN TECHNOLOGY INC is currently very high, coming in at 77.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.79% is above that of the industry average.
  • You can view the full analysis from the report here: ALGN Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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