Align Earnings: Momentum From Strong Pricing and an Increase in Teen Cases Fuel Positive Outlook

Narrow-moat Align Technology reported second-quarter earnings that were better than our expectations. Total sales were up 3.2% year over year, driven by strong clear aligner pricing and volume as well as improved utilization rates among dental professionals. While we remain cautious to call a full return to prepandemic normalcy in the clear aligner market, we continue to see reviving conditions, especially in China, and expect less year-over-year volatility. With this improving environment, management raised full-year guidance for top-line and operating margin. We are raising our fair value estimate to $338 per share from $311 after baking in near-term upticks in our forecast and the time value of money.