On June 1, 2015, we issued an updated research report on Edwards Lifesciences Corp. EW – one of the leading manufacturers of tissue heart valve and repair products. This company is also a leading player in hemodynamic monitoring.
Edwards Lifesciences delivered promising first-quarter 2015 financial numbers, which comfortably outshone both the top and bottom-line estimates. On the guidance front, while the company has kept its original revenue expectation intact, the upward revision in projected EPS for 2015 raises optimism.
In line with its strong strategic growth plan and financial goals for 2015, in transcatheter heart valve (THV), Edwards expects to maintain its leadership position with the introduction of innovative, best-in-class transcatheter valves in the U.S., Europe and Japan. The company expects to expand the availability of transcatheter technology and double sales of global TAVR procedures to more than $3 billion in 2019.
We also believe the huge untapped potential in emerging markets is likely to act as a positive catalyst for Edwards. This is reflected in the robust 10.5% underlying sales growth (at constant exchange rate or CER) in Rest of the World and 14.2% in Japan for the first quarter. Among the emerging nations, management believes the market in Japan will be worth $300–$400 million in 2019, given favorable market conditions and reimbursement options.
Currently, Edwards is consolidating its foothold across all its operating businesses through sturdy pipeline development. In response to this, Edwards rolled out a multi-center early feasibility study to evaluate its FORTIS transcatheter mitral valve in the U.S during the first quarter.
On the flip side, an expected increase in competition for Edwards’ THV and the adverse foreign currency impact anticipated for 2015 pose concerns for the company. Also, the reimbursement cut implemented by the government back in 2010 and any similar decision, if adopted, in future by the administration will tend to have an adverse effect on Edwards’ financials.
Currently, the Zacks Consensus Estimate of EPS for 2015 and 2016 stand at $4.27 and $4.74 per share, respectively.
The stock has a Zacks Rank #3 (Hold).
Key Picks from the Sector
Medical instrument stocks such as Cepheid CPHD, Ekso Bionics Holdings, Inc. EKSO and Electromed, Inc. ELMD are worth a look. All the three stocks carry a Zacks Rank #2 (Buy).
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