Why Is Align Technology (ALGN) Down 18.7% Since Last Earnings Report?

Core Viewpoint - Align Technology has experienced a decline of approximately 18.7% in share price over the past month, underperforming the S&P 500, raising questions about the potential for a breakout or continued negative trend leading up to the next earnings release [1] Financial Performance - The company reported adjusted earnings per share of $2.14 for Q1 fiscal 2024, reflecting a 17.6% increase year-over-year and surpassing the Zacks Consensus Estimate by 8.1% [2] - Revenues for the quarter increased by 5.8% year-over-year to $997.4 million, exceeding the Zacks Consensus Estimate by 2.6% [3] - The Clear Aligner segment saw revenues rise 3.5% year-over-year to $817.3 million, driven by strong volume growth in APAC and EMEA regions, while Imaging Systems & CAD/CAM Services revenues increased by 2.4% to $180.2 million [4] Margins and Expenses - Gross profit for Q1 was $697.8 million, up 5.6% year-over-year, but gross margin contracted by 9 basis points to 70.0% due to a 6.1% increase in the cost of net revenues [5] - SG&A expenses rose by 2.8% to $451.8 million, and R&D expenses increased by 5% to $91.9 million, with operating income growing 15.4% to $154.1 million and operating margin expanding by 130 basis points to 15.5% [5] Cash Position and Stock Repurchase - At the end of Q1 2024, Align Technology had cash and cash equivalents of $865.8 million, down from $937.4 million at the end of Q4 [6] - The company repurchased approximately 1.1 million shares at an average price of $230.13, with $650 million remaining for stock repurchase under its January 2023 program [7] Guidance - Align Technology updated its full-year 2024 revenue guidance to an increase of 6-8% year-over-year, with the Zacks Consensus Estimate for 2024 revenues at $4.04 billion [8] - For Q2 2024, the company anticipates revenues between $1.03 billion and $1.05 billion, aligning with the Zacks Consensus Estimate of $1.03 billion [8] Market Sentiment - Estimates for Align Technology have trended downward over the past month, indicating a shift in market sentiment, although the company holds a Zacks Rank 2 (Buy), suggesting an expectation of above-average returns in the coming months [9][11]