On Nov 26, we issued an updated research report on medical technology major Edwards Lifesciences Corp. (EW).
This notable provider of heart valve products and hemodynamic monitoring system reported better-than-expected third-quarter 2014 financial results on Oct 23.
Adjusted earnings per share of 80 cents in the quarter beat the Zacks Consensus Estimate of 72 cents by 11.1%. Adjusted earnings also exceeded the year-ago number by a robust 14.3% and surpassed the company’s third quarter guidance of 66–72 cents.
Likewise, revenues surged a robust 22.6% year over year to $607.4 million, comfortably beating the Zacks Consensus Estimate of $544 million. The top line also topped the company’s guidance range of $530–$570 million.
Moreover, bolstered by a strong third quarter, Edwards raised its financial outlook for full year 2014. The company now expects earnings per share in the range of $3.33–$3.39, higher than the earlier guidance of $3.24–$3.34. Likewise, the company now expects total sales in 2014 to exceed the higher end of its earlier guided range of $2.05–$2.25 billion.
Edwards has grabbed attention since the beginning of 2014, with the receipt of the CE mark approval for its Sapien 3 valve in January, Sapien XT valve in February and INTUITY Elite Valve System in April. Edwards’ robust performance in the first half of the year progressed into the latter half as well fueled by positive results in all of Edwards’ product groups and regions, which resulted in solid double-digit growth in overall sales in the third quarter.
In September, Edwards released positive long-term data from the PARTNER trial which indicated that after five years of implanting a Sapien valve in a patient, the patient will experience improved cardiac function and lower rate of repeated hospitalizations. So far, the Sapien family of valves has been used in the treatment of more than 85,000 patients worldwide – with the majority of them treated with Sapien XT.
We believe that the huge untapped potential in emerging markets is likely to act as a positive catalyst for Edwards. This is reflected in the solid 8.2% underlying sales growth observed in Rest of the World segment and a robust 24.1% increase in Japan during the third quarter. Moreover, during the reported quarter, Edwards launched Sapien XT and experienced higher growth in its surgical heart valve product group in Japan. Such rational moves to expand its presence in the emerging economies are likely to work in the company’s favor, going ahead.
However, we are wary about the expected increase in competition in the transcatheter heart valve market as Edwards' competitors continue to introduce similar products in the U.S. and Europe. Moreover, the company also faces significant currency headwinds, as more than 50% of its total revenue is generated from the international markets. Despite competition intensifying in the medical technology innovation market, we believe Edwards’ successful product launches and pipeline updates strongly position the company to drive solid organic sales growth in the coming quarters.
The stock currently carries a Zacks Rank #2 (Buy).
Key Picks from the Sector
Apart from Edwards, some other medical instruments stocks such as AngioDynamics Inc. (ANGO), EnteroMedics Inc. (ETRM) and Fluidigm Corporation (FLDM) are also worth reckoning. While AngioDynamics sports a Zacks Rank #1 (Strong Buy), both EnteroMedics and Fluidigm hold a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment