Edwards Lifesciences (EW - Free Report) continues to benefit from the huge untapped potential in emerging markets. However, persistent forex woes do not bode well. The stock carries a Zacks Rank #3 (Hold).
Edwards Lifesciences exited the first quarter of 2023 on a bullish note with better-than-expected earnings and revenues. The company also registered year-over-year growth on both fronts. The company’s Transcatheter Mitral and Tricuspid Therapies (TMTT) segment registered strong growth, driven by the continued adoption of the PASCAL Precision system in Europe. During the quarter, the company completed the enrolment of the TRISCEND II pivotal trial for the EVOQUE Tricuspid Valve Replacement System.
Further, growth within Surgical Structural Heart was lifted by the increased adoption of Edwards' premium products across all regions. The company raised its full-year 2023 guidance, which is encouraging too.
Edwards Lifesciences expects to maintain its leadership position in the global Transcatheter Aortic Valve Replacement (TAVR) market through an increased focus on expanding patient access by actively leveraging current valve platforms for additional indications. This includes developing next-generation valve platforms and maintaining trusted relationships with clinicians, payers and regulators.
Patients and clinicians are increasingly preferring TAVR. Based on the substantial body of compelling clinical evidence along with the strong adoption of its TAVR devices, management remains optimistic about the long-term growth opportunity its transcatheter therapies offer in the global market. Edwards Lifesciences also remain committed to aggressively investing in structural heart disease and critical care technologies.
Edwards Lifesciences continues to expect the global TAVR opportunity to increase to $10 billion by 2028, implying a compounded annual growth rate in the low double-digit range. Also, management projects TMTT opportunity to be $5 billion by 2028.
On the flip side, the contraction of both margins during the first quarter was discouraging. In the quarter, gross margin contracted 25 basis points (bps) to 77.4%. The company-provided adjusted gross margin was 77.5%, reflecting a 30 basis-point contraction year over year. This year-over-year reduction was due to a less favorable impact from foreign exchange.
Selling, general and administrative expenses rose 17.8% year over year. During the reported quarter, operating income fell 2.3% year over year. The operating margin contracted 339 bps to 29.6%.
The choppy market conditions due to the persistent foreign exchange impact and stiff competition within the medical device industry are concerns.
Meanwhile, the niche industry is highly competitive, with several competent players. In Heart Valve Therapy, Edwards Lifesciences primarily competes with Medtronic, whereas players such as ICU Medical, and Becton, Dickinson offer competition in the other segments.
Key Picks
Some better-ranked stocks in the overall healthcare sector are Penumbra (PEN - Free Report) , Lantheus (LNTH - Free Report) and Haemonetics (HAE - Free Report) . While Penumbra and Lantheus each sport a Zacks Rank #1 (Strong Buy), Haemonetics carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Penumbra’s stock has risen 181.6% in the past year. The Zacks Consensus Estimate for Penumbra’s earnings per share (EPS) has remained constant at $1.56 for 2023 and $2.56 for 2024 in the past 30 days.
PEN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 109.42%. In the last reported quarter, the company came up with an earnings surprise of 109.09%.
The Zacks Consensus Estimate for Lantheus’ 2023 EPS has remained constant at $5.60 in the past 30 days. Shares of the company have improved 47.9% in the past year against the industry’s 19.5% decline.
LNTH’s earnings beat estimates in each of the trailing four quarters, the average surprise being 25.77%. In the last reported quarter, the company delivered an earnings surprise of 13.95%.
Estimates for Haemonetics’ EPS have increased from $3.43 to $3.55 for 2023 in the past 30 days. Shares of the company have increased 37.3% in the past year against the industry’s 19.5% decline.
HAE’s earnings beat estimates in each of the trailing four quarters, the average surprise being 12.21%. In the last reported quarter, Haemonetics delivered an earnings surprise of 13.24%.
Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry
Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
>>Send me my free report on the top 5 EV stocks<<
Edwards Lifesciences (EW - Free Report) continues to benefit from the huge untapped potential in emerging markets. However, persistent forex woes do not bode well. The stock carries a Zacks Rank #3 (Hold).
Edwards Lifesciences exited the first quarter of 2023 on a bullish note with better-than-expected earnings and revenues. The company also registered year-over-year growth on both fronts. The company’s Transcatheter Mitral and Tricuspid Therapies (TMTT) segment registered strong growth, driven by the continued adoption of the PASCAL Precision system in Europe. During the quarter, the company completed the enrolment of the TRISCEND II pivotal trial for the EVOQUE Tricuspid Valve Replacement System.
Further, growth within Surgical Structural Heart was lifted by the increased adoption of Edwards' premium products across all regions. The company raised its full-year 2023 guidance, which is encouraging too.
Edwards Lifesciences expects to maintain its leadership position in the global Transcatheter Aortic Valve Replacement (TAVR) market through an increased focus on expanding patient access by actively leveraging current valve platforms for additional indications. This includes developing next-generation valve platforms and maintaining trusted relationships with clinicians, payers and regulators.
Patients and clinicians are increasingly preferring TAVR. Based on the substantial body of compelling clinical evidence along with the strong adoption of its TAVR devices, management remains optimistic about the long-term growth opportunity its transcatheter therapies offer in the global market. Edwards Lifesciences also remain committed to aggressively investing in structural heart disease and critical care technologies.
Edwards Lifesciences continues to expect the global TAVR opportunity to increase to $10 billion by 2028, implying a compounded annual growth rate in the low double-digit range. Also, management projects TMTT opportunity to be $5 billion by 2028.
On the flip side, the contraction of both margins during the first quarter was discouraging. In the quarter, gross margin contracted 25 basis points (bps) to 77.4%. The company-provided adjusted gross margin was 77.5%, reflecting a 30 basis-point contraction year over year. This year-over-year reduction was due to a less favorable impact from foreign exchange.
Selling, general and administrative expenses rose 17.8% year over year. During the reported quarter, operating income fell 2.3% year over year. The operating margin contracted 339 bps to 29.6%.
The choppy market conditions due to the persistent foreign exchange impact and stiff competition within the medical device industry are concerns.
Meanwhile, the niche industry is highly competitive, with several competent players. In Heart Valve Therapy, Edwards Lifesciences primarily competes with Medtronic, whereas players such as ICU Medical, and Becton, Dickinson offer competition in the other segments.
Key Picks
Some better-ranked stocks in the overall healthcare sector are Penumbra (PEN - Free Report) , Lantheus (LNTH - Free Report) and Haemonetics (HAE - Free Report) . While Penumbra and Lantheus each sport a Zacks Rank #1 (Strong Buy), Haemonetics carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Penumbra’s stock has risen 181.6% in the past year. The Zacks Consensus Estimate for Penumbra’s earnings per share (EPS) has remained constant at $1.56 for 2023 and $2.56 for 2024 in the past 30 days.
PEN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 109.42%. In the last reported quarter, the company came up with an earnings surprise of 109.09%.
The Zacks Consensus Estimate for Lantheus’ 2023 EPS has remained constant at $5.60 in the past 30 days. Shares of the company have improved 47.9% in the past year against the industry’s 19.5% decline.
LNTH’s earnings beat estimates in each of the trailing four quarters, the average surprise being 25.77%. In the last reported quarter, the company delivered an earnings surprise of 13.95%.
Estimates for Haemonetics’ EPS have increased from $3.43 to $3.55 for 2023 in the past 30 days. Shares of the company have increased 37.3% in the past year against the industry’s 19.5% decline.
HAE’s earnings beat estimates in each of the trailing four quarters, the average surprise being 12.21%. In the last reported quarter, Haemonetics delivered an earnings surprise of 13.24%.
Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry
Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
>>Send me my free report on the top 5 EV stocks<<
Get the latest research report on EW - FREE
Get the latest research report on HAE - FREE
Get the latest research report on PEN - FREE
Get the latest research report on LNTH - FREE