SmileDirectClub Dives 15% On Wider-Than-Expected 2Q Loss


Shares of SmileDirectClub dropped 15% in US midday trading after the maker of dental aligners reported a bigger 2Q loss than analysts had estimated. Store closures and delayed customer purchases tied to COVID-19-related restrictions weighed on the company’s quarterly results.

SmileDirectClub (SDC) posted a 2Q loss of $0.17 per share versus analysts’ expectations of a loss of $0.14 per share. Revenues of $107 million, however, came ahead of Street estimates of $84.2 million. Its unique aligner shipments fell to 57,136 in 2Q from 122,751 unique aligners in 1Q.

SmileDirectClub continues to expect uncertainty related to the COVID-19 pandemic. However, the company said that it remains on track to achieve positive adjusted EBITDA in the fourth quarter.

Following the 2Q results, Stifel analyst Jonathan Block reiterated a Buy rating on the stock, saying that he is positive on the company’s EBITDA forecast for 4Q. However, Block also cautioned that “negative sentiment may remain intact for now.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 5 Buys, 2 Holds, and 2 Sells. The average price target of $9.31 implies upside potential of about 17%. (See SDC stock analysis on TipRanks).

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