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Here's Why You Should Retain Edwards Lifesciences (EW) Now
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Edwards Lifesciences Corporation (EW - Free Report) has been gaining from strong Critical Care and Transcatheter Mitral and Tricuspid Therapies (TMTT) segments. Robust growth in the Surgical Structural Heart business amid the pandemic-led headwinds buoys optimism. The growing uptake of Edwards RESILIA tissue valves is another upside. However, mounting expenses and foreign exchange woes raise apprehension.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 40.1% compared with the 1.6% fall of the industry it belongs to and 13.4% surge of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $69.52 billion. Its fourth-quarter 2021 earnings missed the Zacks Consensus Estimate by 7.3%.
Over the past five years, the company registered an earnings increase of 17.1% compared with the industry’s 8.8% rise and the S&P 500’s 2.8% growth. The company’s long-term expected growth rate of 13.9% compares with the industry’s growth projection of 15.2% and the S&P 500’s estimated 11.4% increase.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Drivers
Critical Care Business Grows: We are upbeat about the Critical Care arm, which registered year-over-year revenue growth in the fourth quarter, both on a reported and an underlying basis.
The revenue uptick resulted from balanced contributions from all product lines, led by HemoSphere sales in the United States as hospital capital spending resumed. The company also witnessed a robust demand for True Wave disposable pressure monitoring devices and ClearSight non-invasive finger cups in the reported quarter.
Surgical Structural Heart Looks Promising: Edwards Lifesciences registered strong growth within the Surgical Structural Heart business in the fourth quarter despite the resurgence in COVID-19 cases.
The company continued to witness the global adoption of Edwards RESILIA tissue valves, including INSPIRIS RESILIA aortic valve, the KONECT RESILIA valves conduit and the MITRIS RESILIA mitral valve in the quarter. The growing number of clinical evidence backing Edwards RESILIA tissue valves raises optimism.
TMTT Portfolio Holds Potential: Edwards Lifesciences has been making significant progress in its TMTT portfolio to include important solutions under its purview to serve the untapped mitral and tricuspid patient pool. In the fourth quarter, the segment registered an uptick of 92.6% from the prior-year figure on a reported basis. On an underlying basis, the improvement was 96.4%.
The company witnessed continued momentum in the adoption of the PASCAL system, along with the activation of more centers across Europe in the quarter. Edwards Lifesciences continues to expect European approval of its next-generation PASCAL Precision System later in 2022.
Downsides
Escalating Costs Pressurize Bottom Line: In the fourth quarter, Edwards Lifesciences’ selling, general and administrative expenses rose 25.3% year over year, whereas research and development expenditure increased 18.9% year over year. These mounting operating expenses drove operating costs by 22.9%, building significant pressure on the company’s bottom line.
Forex Woes to Hamper Growth: Unfavorable foreign currency impact has been affecting Edward Lifesciences’ gross margin over the past few quarters. Per management, significant currency fluctuations could have a material effect on revenues, cost of sales and operational results.
Reimbursement Cut to Increase Expenses: The U.S. government's law related to the healthcare system has measures that reduce or limit Medicare reimbursement, require individuals to have health insurance, and levy higher taxes, among others. This, in turn, puts pressure on the cost structure of companies like Edwards Lifesciences in the medical sector.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Edwards Lifesciences’ earnings for 2022 has moved 0.4% down to $2.56.
The Zacks Consensus Estimate for 2022 revenues is pegged at $5.72 billion, suggesting a 9.4% rise from the 2021 reported number.
Key Picks
A few better-ranked stocks in the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , McKesson Corporation (MCK - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) .
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein has outperformed the industry over the past year. HSIC has gained 32.9% compared with the industry’s 8.7% rise over the past year.
McKesson has a long-term earnings growth rate of 11.8%. MCK’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 20.6%, on average. It presently carries a Zacks Rank #2.
McKesson has outperformed the industry over the past year. MCK has gained 55.9% compared with 8.8% industry growth in the said period.
IDEXX has a long-term earnings growth rate of 13%. The company’s earnings surpassed estimates in the trailing four quarters, delivering an average surprise of 18.6%. IDXX currently has a Zacks Rank #2.
IDEXX has outperformed its industry in the past year. IDXX has gained 9.8% against the industry’s 1.6% decline in the same period.
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Here's Why You Should Retain Edwards Lifesciences (EW) Now
Edwards Lifesciences Corporation (EW - Free Report) has been gaining from strong Critical Care and Transcatheter Mitral and Tricuspid Therapies (TMTT) segments. Robust growth in the Surgical Structural Heart business amid the pandemic-led headwinds buoys optimism. The growing uptake of Edwards RESILIA tissue valves is another upside. However, mounting expenses and foreign exchange woes raise apprehension.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 40.1% compared with the 1.6% fall of the industry it belongs to and 13.4% surge of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $69.52 billion. Its fourth-quarter 2021 earnings missed the Zacks Consensus Estimate by 7.3%.
Over the past five years, the company registered an earnings increase of 17.1% compared with the industry’s 8.8% rise and the S&P 500’s 2.8% growth. The company’s long-term expected growth rate of 13.9% compares with the industry’s growth projection of 15.2% and the S&P 500’s estimated 11.4% increase.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Drivers
Critical Care Business Grows: We are upbeat about the Critical Care arm, which registered year-over-year revenue growth in the fourth quarter, both on a reported and an underlying basis.
The revenue uptick resulted from balanced contributions from all product lines, led by HemoSphere sales in the United States as hospital capital spending resumed. The company also witnessed a robust demand for True Wave disposable pressure monitoring devices and ClearSight non-invasive finger cups in the reported quarter.
Surgical Structural Heart Looks Promising: Edwards Lifesciences registered strong growth within the Surgical Structural Heart business in the fourth quarter despite the resurgence in COVID-19 cases.
The company continued to witness the global adoption of Edwards RESILIA tissue valves, including INSPIRIS RESILIA aortic valve, the KONECT RESILIA valves conduit and the MITRIS RESILIA mitral valve in the quarter. The growing number of clinical evidence backing Edwards RESILIA tissue valves raises optimism.
TMTT Portfolio Holds Potential: Edwards Lifesciences has been making significant progress in its TMTT portfolio to include important solutions under its purview to serve the untapped mitral and tricuspid patient pool. In the fourth quarter, the segment registered an uptick of 92.6% from the prior-year figure on a reported basis. On an underlying basis, the improvement was 96.4%.
The company witnessed continued momentum in the adoption of the PASCAL system, along with the activation of more centers across Europe in the quarter. Edwards Lifesciences continues to expect European approval of its next-generation PASCAL Precision System later in 2022.
Downsides
Escalating Costs Pressurize Bottom Line: In the fourth quarter, Edwards Lifesciences’ selling, general and administrative expenses rose 25.3% year over year, whereas research and development expenditure increased 18.9% year over year. These mounting operating expenses drove operating costs by 22.9%, building significant pressure on the company’s bottom line.
Forex Woes to Hamper Growth: Unfavorable foreign currency impact has been affecting Edward Lifesciences’ gross margin over the past few quarters. Per management, significant currency fluctuations could have a material effect on revenues, cost of sales and operational results.
Reimbursement Cut to Increase Expenses: The U.S. government's law related to the healthcare system has measures that reduce or limit Medicare reimbursement, require individuals to have health insurance, and levy higher taxes, among others. This, in turn, puts pressure on the cost structure of companies like Edwards Lifesciences in the medical sector.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Edwards Lifesciences’ earnings for 2022 has moved 0.4% down to $2.56.
The Zacks Consensus Estimate for 2022 revenues is pegged at $5.72 billion, suggesting a 9.4% rise from the 2021 reported number.
Key Picks
A few better-ranked stocks in the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , McKesson Corporation (MCK - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) .
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein has outperformed the industry over the past year. HSIC has gained 32.9% compared with the industry’s 8.7% rise over the past year.
McKesson has a long-term earnings growth rate of 11.8%. MCK’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 20.6%, on average. It presently carries a Zacks Rank #2.
McKesson has outperformed the industry over the past year. MCK has gained 55.9% compared with 8.8% industry growth in the said period.
IDEXX has a long-term earnings growth rate of 13%. The company’s earnings surpassed estimates in the trailing four quarters, delivering an average surprise of 18.6%. IDXX currently has a Zacks Rank #2.
IDEXX has outperformed its industry in the past year. IDXX has gained 9.8% against the industry’s 1.6% decline in the same period.