ATEC

We rate Alphatec Holdings, Inc. (ATEC) as a Reduce with a composite score of 45.9/100 at a current price of $12.58. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (63th percentile) and value (55th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (24th percentile) and quality (47th percentile) tempers our overall conviction. We assign a No Moat rating (27/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Alphatec Holdings, Inc. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 45.9/100 places it at rank #2648 in our full 7,333-stock universe. At $2.2B in market capitalization, Alphatec Holdings, Inc. is a mid-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 35%, though momentum at the 48th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 69% (+26.5pp vs sector) narrow to operating margins of -16% (-17.2pp vs sector) and net margins of -23.4%, yielding a gross-to-net conversion rate of -34%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $12.58, Alphatec Holdings, Inc. is trading near fair value based on current fundamentals. Our value factor score of 55/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 47.0x (at a premium), P/B of 168.0x, P/S of 2.8x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a High uncertainty rating to Alphatec Holdings, Inc.. Key risk factors include significant leverage (4864% debt-to-equity), current negative profitability (net margin -23.4%), low beta of 0.70 — while defensive, this may indicate limited upside participation in bull markets. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (4864% debt-to-equity); current negative profitability (net margin -23.4%); low beta of 0.70 — while defensive, this may indicate limited upside participation in bull markets; the combination of leverage (4864% D/E) and thin margins (-23.4% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 63th percentile and quality factor at the 47th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 69% provide a buffer against cost pressures; above-average stability (63th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Alphatec Holdings, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-1401.4%), elevated leverage (4864% D/E), negative profitability, weak asset returns (ROA -20.5%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Alphatec Holdings, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Alphatec Holdings, Inc. receives a Reduce rating with a composite score of 45.9/100 (rank #2648 of 7,333). Our quantitative framework assigns a No Moat (27/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 47/100.

Our analysis does not support a constructive view on Alphatec Holdings, Inc. at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.