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Why Is Edwards Lifesciences (EW) Up 4.5% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Edwards Lifesciences Corporation (EW - Free Report) . Shares have added about 4.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Edwards Lifesciences reported first-quarter 2017 adjusted earnings per share (EPS) of $0.94, which surpassed the Zacks Consensus Estimate by 14.6%. Adjusted earnings also improved 32.4% year over year, primarily driven by strong sales growth.
Per management, strong sales of transcatheter valves drove the bottom line.
Excluding one-time items, net income in the first quarter was $230.2 million or $1.06 per share, up 60.9% or 60.6% year over year, respectively.
Sales Details
Edwards Lifesciences’ first-quarter sales improved 26.7% to $883.5 million. The figure also beat the Zacks Consensus Estimate by 13.7%. Underlying sales increased 19.1%, (excluding the impact of Germany stocking sales, as customers in Germany elected to purchase additional inventory of the SAPIEN 3 valve in anticipation of a potential supply interruption resulting from recent intellectual property litigation).
Revenues were primarily driven by considerable growth in transcatheter heart valve sales as well as strong performance by the Critical Care segment.
Segments Details
For the first quarter, the company reported Transcatheter Heart Valve Therapy (THVT) sales of $539.2 million, reflecting 46.6% growth over the prior-year quarter. In the U.S., THVT sales for the quarter were $298.8 million, up 38.1% year over year.
Surgical Heart Valve Therapy sales for the quarter were $199.5 million, up 1.8% from the prior-year quarter. This was led by strong demand for the EDWARDS INTUITY Elite valve system and supply recovery in mitral valve sales, partially offset by the continued shift from surgical aortic valves to the SAPIEN 3 valve.
Critical Care sales were $144.8 million in the reported quarter, representing an increase of 8.4% from first-quarter 2016. Solid growth across all product categories was driven by double-digit growth in the company's Enhanced Surgical Recovery Program and a lift from an U.S. bulk order.
Margins
In the first quarter, gross margin expanded 145 basis points (bps) to 75.5% owing to a more profitable product mix, led by growing sales of transcatheter valves. This was however partially offset by adverse foreign exchange.
SG&A expenses rose 7.9% year over year to $229.6 million on account of sales and personnel related expenses, primarily in the Transcatheter Valve (THV) segment. On the other hand, R&D expenditures increased 26.4% year over year to $128.7 million, owing to continued investments in the company’s transcatheter mitral valve and mitral valve programs, including expenditure on clinical trials. Adjusted operating margin in the quarter expanded 601 bps to 35.0% as the rise in revenues outweighed the increase in operating expenses.
Cash Position
Edwards Lifesciences exited the first quarter with cash and cash equivalents and short-term investments of $918.9 million, compared with $1.27 billion at the end of fiscal 2016. Long-term debt in the reported quarter totaled $847.9 million, compared with $822.3 million at the end of fiscal 2016.
Cash flow from operating activities was $128.3 million in the first quarter. Excluding capital spending of $15.9 million, free cash flow was $112.4 million. During the quarter, management repurchased 4.6 million shares for $437.4 million to offset dilution associated with its Valtech Cardio acquisition and stock-based incentive compensation.
Updated 2017 Guidance
Edwards Lifesciences narrowed its full-year 2017 sales to the range of $3.2–$3.4 billion from $3.0–$3.4 billion. The Zacks Consensus Estimate for full-year revenue is $3.24 billion, above the guided range. Adjusted EPS expectations have however been raised to $3.43–$3.55 from $3.30–$3.45. The Zacks Consensus Estimate for full-year adjusted EPS is $3.40, within the company’s guided range.
For the second quarter of 2017, the company projects sales (excluding the effect of Germany stocking sales) between $810 million and $850 million. The Zacks Consensus Estimate for revenues is $817.2 million, within the projected range. The company estimates adjusted EPS between $0.79 and $0.89. Meanwhile, the Zacks Consensus Estimate for adjusted EPS is $0.86, which is also within the company-forecasted range.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been six revisions higher for the current quarter compared to one lower.
Edwards Lifesciences Corporation Price and Consensus
At this time, Edwards Lifesciences' stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. Following the exact same course, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth investors based on our style scores.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Edwards Lifesciences (EW) Up 4.5% Since the Last Earnings Report?
A month has gone by since the last earnings report for Edwards Lifesciences Corporation (EW - Free Report) . Shares have added about 4.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Edwards Lifesciences Tops Q1 Earnings, Updates '17 View
Edwards Lifesciences reported first-quarter 2017 adjusted earnings per share (EPS) of $0.94, which surpassed the Zacks Consensus Estimate by 14.6%. Adjusted earnings also improved 32.4% year over year, primarily driven by strong sales growth.
Per management, strong sales of transcatheter valves drove the bottom line.
Excluding one-time items, net income in the first quarter was $230.2 million or $1.06 per share, up 60.9% or 60.6% year over year, respectively.
Sales Details
Edwards Lifesciences’ first-quarter sales improved 26.7% to $883.5 million. The figure also beat the Zacks Consensus Estimate by 13.7%. Underlying sales increased 19.1%, (excluding the impact of Germany stocking sales, as customers in Germany elected to purchase additional inventory of the SAPIEN 3 valve in anticipation of a potential supply interruption resulting from recent intellectual property litigation).
Revenues were primarily driven by considerable growth in transcatheter heart valve sales as well as strong performance by the Critical Care segment.
Segments Details
For the first quarter, the company reported Transcatheter Heart Valve Therapy (THVT) sales of $539.2 million, reflecting 46.6% growth over the prior-year quarter. In the U.S., THVT sales for the quarter were $298.8 million, up 38.1% year over year.
Surgical Heart Valve Therapy sales for the quarter were $199.5 million, up 1.8% from the prior-year quarter. This was led by strong demand for the EDWARDS INTUITY Elite valve system and supply recovery in mitral valve sales, partially offset by the continued shift from surgical aortic valves to the SAPIEN 3 valve.
Critical Care sales were $144.8 million in the reported quarter, representing an increase of 8.4% from first-quarter 2016. Solid growth across all product categories was driven by double-digit growth in the company's Enhanced Surgical Recovery Program and a lift from an U.S. bulk order.
Margins
In the first quarter, gross margin expanded 145 basis points (bps) to 75.5% owing to a more profitable product mix, led by growing sales of transcatheter valves. This was however partially offset by adverse foreign exchange.
SG&A expenses rose 7.9% year over year to $229.6 million on account of sales and personnel related expenses, primarily in the Transcatheter Valve (THV) segment. On the other hand, R&D expenditures increased 26.4% year over year to $128.7 million, owing to continued investments in the company’s transcatheter mitral valve and mitral valve programs, including expenditure on clinical trials. Adjusted operating margin in the quarter expanded 601 bps to 35.0% as the rise in revenues outweighed the increase in operating expenses.
Cash Position
Edwards Lifesciences exited the first quarter with cash and cash equivalents and short-term investments of $918.9 million, compared with $1.27 billion at the end of fiscal 2016. Long-term debt in the reported quarter totaled $847.9 million, compared with $822.3 million at the end of fiscal 2016.
Cash flow from operating activities was $128.3 million in the first quarter. Excluding capital spending of $15.9 million, free cash flow was $112.4 million. During the quarter, management repurchased 4.6 million shares for $437.4 million to offset dilution associated with its Valtech Cardio acquisition and stock-based incentive compensation.
Updated 2017 Guidance
Edwards Lifesciences narrowed its full-year 2017 sales to the range of $3.2–$3.4 billion from $3.0–$3.4 billion. The Zacks Consensus Estimate for full-year revenue is $3.24 billion, above the guided range. Adjusted EPS expectations have however been raised to $3.43–$3.55 from $3.30–$3.45. The Zacks Consensus Estimate for full-year adjusted EPS is $3.40, within the company’s guided range.
For the second quarter of 2017, the company projects sales (excluding the effect of Germany stocking sales) between $810 million and $850 million. The Zacks Consensus Estimate for revenues is $817.2 million, within the projected range. The company estimates adjusted EPS between $0.79 and $0.89. Meanwhile, the Zacks Consensus Estimate for adjusted EPS is $0.86, which is also within the company-forecasted range.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been six revisions higher for the current quarter compared to one lower.
Edwards Lifesciences Corporation Price and Consensus
Edwards Lifesciences Corporation Price and Consensus | Edwards Lifesciences Corporation Quote
VGM Scores
At this time, Edwards Lifesciences' stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. Following the exact same course, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth investors based on our style scores.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.