Why Align Technology Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Align Technology (Nasdaq: ALGN  ) , a device company geared toward the dental industry, and maker of Invisalign, dipped by as much as 10%, following a cautionary earnings note from the company warning that it would only meet the low-end of its previous guidance.

So what: Blaming weak sales in the dental business and the negative effects of Superstorm Sandy, which caused both operational and sales disruptions, Align updated its fourth-quarter forecast to sales of $134.2 million-$137.8 million, on a profit of $0.21-$0.23 per share. Wall Street had been looking for Align to report sales of $136 million, and a profit of $0.23 per share. Align also noted its intention to lay off 25 employees -- less than 1% of its workforce -- as it eliminates some non-crucial positions.

Now what: Sirona Dental Systems (Nasdaq: SIRO  ) knocked my socks off when it crushed earnings estimates recently, but I believe that Align is more representative of the tepid spending we're witnessing in the dental industry. The best margins in the dental industry are often made on the most optional of procedures. Between a slowing economy and the threat that taxes on upper income earners may rise, the dental industry may be in for a toothache of major proportions in 2013.

Craving more input? Start by adding Align Technology to your free and personalized Watchlist so you can keep up on the latest news with the company.


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