What happened

Shares of Align Technology (NASDAQ:ALGN) moved 24% higher in April, according to data from S&P Global Market Intelligence. The maker of the Invisalign dental aligners got a boost from the broader market recovery and as a number of state governments took steps to reopen their economies toward the end of the month. That momentum was enough to overcome a disappointing first-quarter earnings report.

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So what

After a slow start to April, Align Technology shares surged 14.6% on April 6 as the S&P 500 jumped 7% on signs that the pandemic had peaked in hard-hit European countries such as Italy and Spain and was reaching a plateau in New York, the epicenter of the U.S. coronavirus outbreak. Align stock had plunged more than 50% in March over concerns that the pandemic would impede its business. The company relies on dentists to scan patients' teeth so that the custom aligners can be manufactured, and dentist visits were halted due to the demands of social distancing.

A man putting a dental aligner into his mouth.

Image source: Getty Images.

Align shares rallied as the broad market continued to gain on optimism about the arc of the pandemic and as the Federal Reserve announced on April 9 plans to lend as much as $2.3 trillion in order to support the economy.

Align shares traded mostly flat for the next couple weeks, and then started climbing at the end of the month on signs that some states were ready to loosen restrictions on businesses, which would favor the dental technology stock.

Finally, shares pulled back 2.6% on April 30 after its earnings report came out, showing that Align's revenue rose less than 1% from the previous year to $551 million, well short of analysts' consensus estimate of $580.3 million.  The impact of COVID-19, which shut down dental offices in North America and Europe, was more visible on the bottom line as adjusted earnings per share fell from $1.25 to $0.73, missing expectations of $1. Management also pulled its guidance for the full year due to the uncertainty caused by the pandemic.

Now what

The healthcare stock  has traded flat thus far in May and is still down about 23% year to date; investors may be wary of bidding it higher until dental offices start to reopen. The second quarter will almost certainly be worse than the first, and a full-fledged recovery for the company may be difficult while fears of the virus are still active as dentists are one of the most at-risk professions given that they work on open mouths. That could bode poorly for Align Technology stock unless the COVID-19 pandemic is soon contained.

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