Potential Recession Dims Align's Prospects; Lowering Our Fair Value Estimate

We've lowered our fair value estimate for Align Technology to $331 per share, down from $461, as we've pared back our assumptions including significantly lower growth in 2022 and 2023 due to shifting consumer behavior as inflation, potential recession, and anemic stock market performance dampen demand for discretionary dental spending. Similar to LASIK vision correction and aesthetic surgical procedures, which tend to be sensitive to stock market conditions, we anticipate clear aligners are also likely to come under pressure through the near term. Further, as the premium product in this market, Invisalign could see potential customers switch to lower-priced competitors. Despite near-term turbulence, we remain comfortable with Align's narrow economic moat, which primarily stems from switching costs associated with its iTero scanners.