Even after losing nearly 65% of its market value in the first half of the year, Align Technology Inc. (ALGN, Financial) still does not look like anything approaching a buy. The Phoenix-area company earned the dubious distinction of leading the steep decline among medical device providers in the first six months of 2022, according to health care consulting firm Evaluate. In total, companies in the space saw half a trillion dollars shaved off their value.
Evaluate has been tracking the industry’s share performance since 2013, and Align is the first large-cap company to lose more than half its value. The stock currently trades at $247.18, light years away from its year-to-date high of more than $737. The company does have its supporters; all 11 analysts offering opinions rate the stock a buy or strong buy with an average price target of $429, reported Yahoo Finance. What is somewhat perplexing – and likely a bad sign- is the stock is trading below its low target price.
As long as inflation stays high, Align’s chances of reversing its fortunes remain poor. The company’s mainstay is Invisalign, the invisible braces for kids, teens and adults. Since the treatment is cosmetic, the great majority of patients have to pay out of pocket and many are proving reluctant to do so given their disposable income is being eaten away by higher prices for essentials.
Caption: Align Technology shareholders saw the value of their investment drop 65% in the first half of the year.
In the first quarter of 2022, Align shipped 5% fewer Invisalign cases from the final quarter of 2021, continuing the decline. Shares of Switzerland’s Straumann Holding AG (XSWX:STMN, Financial) have also been punished as demand for its competitive product Clear Correct has also shrunk. The easing of the pandemic also had something to do with the drops. When Zoom calls were all the rage, people were much more sensitive about how they looked in electronic face-to-face meetings.
If misery loves company, investors in Align and Straumann have plenty. The first six months of 2022 were the nastiest half-year period for Medtech stocks in the past 10 years, as the companies shed about half a trillion dollars in value. Just one industry outlier with a market cap greater than $10 billion recorded a share price gain during the first half.
Investors are probably wise to steer clear of these stocks since there appears to be no cooling of inflation in the near term, meaning people are going to be reluctant to spend on medical devices in cases where the money is coming out of their pockets.
Other medical device companies suffering dramatic drops in their share prices during the first half of the year were Sysmex Corp. (SSMXY, Financial), down 47%, Dexcom Inc. (DXCM, Financial), which fell 45%, and Intuitive Surgical Inc. (ISRG, Financial), having tumbled 44%.
