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Align Technology (NASDAQ:ALGN) was added as a new short idea at Hedgeye with the potential for 20% downside from current levels.
“Our data suggests continued softness in ALGN’s North American GP utilization heading into 2Q24 and slight miss in 2Q24 revenue, a decent catalyst for the short, especially after the company recently raised guidance for 2024,” Hedgeye analyst Tom Tobin wrote in a note after the close on Thursday.
“ALGN shares correlate strongest with EPS estimates with a seemingly hard floor of 20X forward P/E,” Tobin added. “We expect a softer outlook for 2H24, rising macro concerns, and lower estimates for 2025 can break the 20X floor and push ALGN below $200, or 20% lower from here.
The potential issues for Align (ALGN) include slowing real income growth, rising treatment financing costs and accelerating dental labor costs, Tobin wrote.
Align (ALGN) short interest is 2.2%.
Shares of Align (ALGN) ticked down by 0.3% on Friday.