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We expect medical device maker Edwards Lifesciences Corp (EW - Analyst Report) to beat expectations when it reports second-quarter 2013 results on Jul 25.
 
Why a Likely Positive Surprise?  
 
Our proven model shows that Edwards is likely to beat earnings because it has the right combination of two key ingredients. 
 
Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +1.32%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
 
Zacks Rank #2 (Buy): Edwards currently carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.  
 
The combination of Edwards’ Zacks Rank #2 (Buy) and ESP of +1.32% makes us very confident in looking for a positive earnings beat on Jul 25. 
 
What is Driving the Better-Than-Expected Earnings? 
 
Of late, the flow of good news for this medical device maker remains uninterrupted. Earlier this month, Edwards won a patent infringement case over medical devices major Medtronic (MDT - Analyst Report). As per the German District Court of Mannheim, Medtronic’s CoreValve and CoreValve Evolut violate Edwards’ Spenser patent for transcatheter heart valve technology. This ruling will force Medtronic to recall and discontinue the sale of its products in Germany. Notably, Medtronic’s CoreValve is a close competitor for Edwards in Europe. 
 
Furthermore, Edwards continues to focus on pipeline expansion with a keen eye on high growth markets. In June, the company gained Japanese regulatory clearance for its Sapien XT valve making it the foremost commercially available transcatheter aortic heart valve in the country. It is also working to gain reimbursement approval for Sapien XT in Japan by the end of 2013. 
 
Edwards is also working on Cohort A and Cohort B trials for Sapien XT in the U.S. Moreover, the company’s stellar pipeline visibility is encouraging. We believe that the transcatheter aortic valves offer the most promising opportunity in the cardiac device space for Edwards.
 
Other Stocks to Consider 
 
Edwards is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 2 industry peers:
 
Sarepta Therapeutics Inc. (SRPT - Analyst Report), Earnings ESP of +27.78% and Zacks Rank #1 (Strong Buy)
 
ResMed (RMD - Analyst Report), Earnings ESP of +1.61% and Zacks Rank #1 (Strong Buy)

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