UPDATE: Morgan Stanley Upgrades Align Technology to Equal-Weight on Trends, Limited Competition

Morgan Stanley raised its rating on Align Technology

from Underweight to Equal-weight and suspended its previous $25 price target. Morgan Stanley said, "Our Underweight thesis anticipated pressure from consumer spending and competition. Consumer pressure has emerged and pressured growth and valuation, but FDA barriers continue to restrain potential competitors while buying time for Align to expand its low end product line and reduce price to limit potential discounts from new entrants. Our base case forecast for ~8-10% organic growth in 2013 (1% < consensus) reflects (i) stable 10% new customer adds per year; (ii) price decline moderation to -3%; and (iii) utilization growth, particularly in the orthodontist channel. We assume US discretionary spend recovers, competitors are slow to capture share if approved, and Align wins in litigation vs. ClearCorrect; visibility on each is limited." Align Technology closed at $28.40 on Wednesday.