On Nov 30, 2015, we issued an updated research report on California-based medical equipment manufacturer – Edwards Lifesciences Corp. EW. The company is the world’s leading manufacturer of tissue heart valves and repair products used to replace or repair diseased or defective heart valves in patients.
Edwards Lifesciences delivered impressive third-quarter 2015 results, which outshone both the top and bottom-line estimates. On the guidance front, the elevated EPS expectation for the full year buoys investor optimism. The raised view reflects the solid sales performance delivered by the company’s transcatheter heart valve (THV) and the strength of Edwards’ market leading product portfolio.
Meanwhile, the company continues to expand its foothold in the emerging markets, where Edwards possesses huge untapped potential to flourish. This is evident from the solid 13.1% underlying sales growth that at constant exchange rate in Rest of the World and 7.4% in Japan during the third quarter.
At the moment, the company plans to launch its SAPIEN 3 valve in the Japanese market in the near future. Additionally, the launch procedure of the non-invasive ClearSight system is scheduled for fourth-quarter 2015. This further fortifies Edwards’ opportunity to expand in Japan.
Further, THV sales continue to improve on a year-over-year basis, indicating the company’s leading position in the global THV market. During the reported quarter, the company witnessed double-digit growth in its THV sales in both the domestic market and overseas, on an underlying basis. Encouraged by the impressive performance of THV through the third quarter, Edwards now expects underlying sales growth for THV in 2015 at the high-end of the previous guided range of 25%–35%.
On the flip side, although foreign exchange headwind had a negligible impact on Edwards’ international sales in the third quarter, no ultimate respite can be expected on this ground. This is evident from Edwards’ projection that its full year 2015 sales will be negatively impacted to the tune of $170 million on account of currency headwind. Also, reimbursement pressure and competitive headwinds continue to pose threats.
Currently, Edwards Lifesciences carries a Zacks Rank #3 (Hold).
Key Picks in the Sector
Some better-ranked medical stocks are Nxstage Medical, Inc. NXTM, ICU Medical, Inc. ICUI and GW Pharmaceuticals plc GWPH. All the three stocks hold a Zacks Rank #1 (Strong Buy).
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