The shares of Align Technology ( NASDAQ: ALGN ) lost ~5% in the pre-market after the company’s 2Q 2022 results prompted Goldman Sachs to downgrade the clear aligner maker to Sell from Buy due to concerns over growth in a challenging macro environment.
“While weaker demand is the biggest variable in the near-term, our Sell thesis is also based on a more conservative view of long-term growth as elective treatment demand normalizes post pandemic,” the analysts wrote.
The team points out that Align ( ALGN ) shares trade over 60% below a Sep. 2021 peak, while S&P 500 has lost only 15% during the period. However, the stock could continue to underperform relatively if the recovery in growth lags company expectations, the analysts added, slashing their price target to $250 per share.
In addition, Goldman Sachs expects Align’s ( ALGN ) valuation to remain under pressure given the lower growth setup and argues that the stock no longer screens as cheap compared to high-growth peers in healthcare.
Wall Street has remained bullish on Align ( ALGN ) stock, with an average rating of Buy from analysts, while Seeking Alpha Authors rated it as a Hold. However, our quant system, which consistently beats the market , rated ALGN as a Strong Sell.
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Align draws double downgrade at Goldman Sachs after 2Q results