We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Edwards Lifesciences (EW) Up 1.8% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for Edwards Lifesciences (EW - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Edwards Lifesciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Edwards Lifesciences Beats on Q2 Earnings, Ups Earnings Per Share View
Edwards Lifesciences Corporation’s second-quarter 2020 adjusted earnings per share of 34 cents beat the Zacks Consensus Estimate by a stupendous 126.7%. However, the figure declined 26.1% year over year.
GAAP loss per share was 20 cents in the quarter against the year-ago earnings per share of 38 cents.
Sales Details
Second-quarter net sales improved to $925 million, down 14.9% year over year on a reported and 14% on an underlying basis. However, the metric surpassed the Zacks Consensus Estimate by 18.2%.
Revenues were primarily driven by continued adoption of the company’s life-saving technologies across the globe despite challenges arising from the coronavirus-led business disruptions
Segmental Details
In the second quarter, global sales in the TAVR product group amounted to $594.3 million, down 12.3% from the prior-year figure on reported basis. On an underlying basis, the fall was 11.5%. However, average selling prices were stable worldwide. In the United States, total TAVR sales declined in the low teens year over year. Outside the United States, total TAVR sales declined in the high single digits year over year, on an underlying basis.
TMTT sales totaled $6.1 million, down 11.2% from the prior-year figure on a reported basis. On an underlying basis, the fall was 9.3%. The segment registered strong momentum on increased adoption of the PASCAL mitral valve system in Europe. Notably, the company received CE Mark approval for its PASCAL transcatheter valve repair system to treat patients with tricuspid regurgitation in Europe. Further, the company received the FDA’s nod to initiate a pivotal study for the EVOQUE tricuspid replacement system, which is designed to gain U.S. approval and has received breakthrough device designation from the regulatory body.
Surgical Structural Heart’s sales in the quarter totaled $160.9 million, down 26.1% from the year-ago quarter on a reported basis and 25.1% on an underlying basis. Per management, the downside resulted from lower surgical aortic valve procedures in the United States owing to increased adoption of TAVR. The segment primarily suffered due to a sharp decline in procedures related to COVID-19. However, the decline was partly offset by continued adoption of the INSPIRIS surgical aortic valve and the recent FDA-approved KONECT RESILIA aortic valved conduit. Further, the company reported successful completion of the first commercial cases of the HARPOON mitral valve repair system in Europe.
Critical Care sales totaled $163.7 million in the second quarter, down 11.3% from the year-ago quarter on a reported basis and 10.2% on an underlying basis. The downside resulted from the pandemic-led impact of delayed elective procedures and lower HemoSphere advanced monitoring platform orders in the United States as hospitals continue to limit their capital spending due to COVID-19. However, this was partially offset by robust demand for TruWave disposable pressure monitoring devices used in ICUs.
Margins
In the second quarter, gross profit was $686.8 million, down 12.3%. However, gross margin expanded 222 basis points (bps) to 74.2%.
The company-provided adjusted gross margin was 74.4%, reflecting a year-over-year contraction of 200 bps. This included incremental costs associated with responding to COVID-19 and a negative impact from foreign exchange.
SG&A expenses fell 10.9% year over year to $274.9 million, primarily resulting from the COVID-19 impacts. R&D expenditures dropped 5.1% year over year to $182.1 million, primarily resulting from high clinical spending in the prior year and reduced current-year clinical trial activity due to COVID-19. This drove operating costs down by 8.7% to $457 million.
However, during the reported quarter, operating income was down 18.7% year over year to $229.8 million. Accordingly, operating margin contracted 115 bps to 24.8%.
Cash Position
Edwards Lifesciences exited the second quarter of 2020 with cash and cash equivalents, and short-term investments of $1.16 billion compared with $1.03 billion at the end of the first quarter of 2020. Long-term debt at the end of second-quarter 2020 was $594.7 million compared with $594.6 million at the end of the first quarter of 2020.
Cumulative net cash provided by operating activities at the end of the second quarter was $231 million compared with $341 million a year ago. Capital expenditure rose to $108 million from $64 million a year ago.
Guidance
For 2020, Edwards Lifesciences continues to expect sales in the range of $4-$4.5 billion. The Zacks Consensus Estimate for 2020 revenues is currently pegged at $4.26 billion. The company assumes a progressive recovery likely in the second half of the year. It however apprehends a challenging year-over-year comparison, as last-year sales had improved a robust 19%.
Full-year adjusted earnings per share has been raised to a new range of $1.75-$1.95 on a post-split basis, compared to the previous guidance of $1.58-$1.75 (pre-split basis was $4.75-$5.25). The Zacks Consensus Estimate for the same is currently pinned at $1.66.
For the third quarter, the company projects sales in the range of $1- $1.2 billion. The Zacks Consensus Estimate for the same is currently pegged at $1.05 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 5.91% due to these changes.
VGM Scores
At this time, Edwards Lifesciences has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Edwards Lifesciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Edwards Lifesciences (EW) Up 1.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Edwards Lifesciences (EW - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Edwards Lifesciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Edwards Lifesciences Beats on Q2 Earnings, Ups Earnings Per Share View
Edwards Lifesciences Corporation’s second-quarter 2020 adjusted earnings per share of 34 cents beat the Zacks Consensus Estimate by a stupendous 126.7%. However, the figure declined 26.1% year over year.
GAAP loss per share was 20 cents in the quarter against the year-ago earnings per share of 38 cents.
Sales Details
Second-quarter net sales improved to $925 million, down 14.9% year over year on a reported and 14% on an underlying basis. However, the metric surpassed the Zacks Consensus Estimate by 18.2%.
Revenues were primarily driven by continued adoption of the company’s life-saving technologies across the globe despite challenges arising from the coronavirus-led business disruptions
Segmental Details
In the second quarter, global sales in the TAVR product group amounted to $594.3 million, down 12.3% from the prior-year figure on reported basis. On an underlying basis, the fall was 11.5%. However, average selling prices were stable worldwide. In the United States, total TAVR sales declined in the low teens year over year. Outside the United States, total TAVR sales declined in the high single digits year over year, on an underlying basis.
TMTT sales totaled $6.1 million, down 11.2% from the prior-year figure on a reported basis. On an underlying basis, the fall was 9.3%. The segment registered strong momentum on increased adoption of the PASCAL mitral valve system in Europe. Notably, the company received CE Mark approval for its PASCAL transcatheter valve repair system to treat patients with tricuspid regurgitation in Europe. Further, the company received the FDA’s nod to initiate a pivotal study for the EVOQUE tricuspid replacement system, which is designed to gain U.S. approval and has received breakthrough device designation from the regulatory body.
Surgical Structural Heart’s sales in the quarter totaled $160.9 million, down 26.1% from the year-ago quarter on a reported basis and 25.1% on an underlying basis. Per management, the downside resulted from lower surgical aortic valve procedures in the United States owing to increased adoption of TAVR. The segment primarily suffered due to a sharp decline in procedures related to COVID-19. However, the decline was partly offset by continued adoption of the INSPIRIS surgical aortic valve and the recent FDA-approved KONECT RESILIA aortic valved conduit. Further, the company reported successful completion of the first commercial cases of the HARPOON mitral valve repair system in Europe.
Critical Care sales totaled $163.7 million in the second quarter, down 11.3% from the year-ago quarter on a reported basis and 10.2% on an underlying basis. The downside resulted from the pandemic-led impact of delayed elective procedures and lower HemoSphere advanced monitoring platform orders in the United States as hospitals continue to limit their capital spending due to COVID-19. However, this was partially offset by robust demand for TruWave disposable pressure monitoring devices used in ICUs.
Margins
In the second quarter, gross profit was $686.8 million, down 12.3%. However, gross margin expanded 222 basis points (bps) to 74.2%.
The company-provided adjusted gross margin was 74.4%, reflecting a year-over-year contraction of 200 bps. This included incremental costs associated with responding to COVID-19 and a negative impact from foreign exchange.
SG&A expenses fell 10.9% year over year to $274.9 million, primarily resulting from the COVID-19 impacts. R&D expenditures dropped 5.1% year over year to $182.1 million, primarily resulting from high clinical spending in the prior year and reduced current-year clinical trial activity due to COVID-19. This drove operating costs down by 8.7% to $457 million.
However, during the reported quarter, operating income was down 18.7% year over year to $229.8 million. Accordingly, operating margin contracted 115 bps to 24.8%.
Cash Position
Edwards Lifesciences exited the second quarter of 2020 with cash and cash equivalents, and short-term investments of $1.16 billion compared with $1.03 billion at the end of the first quarter of 2020. Long-term debt at the end of second-quarter 2020 was $594.7 million compared with $594.6 million at the end of the first quarter of 2020.
Cumulative net cash provided by operating activities at the end of the second quarter was $231 million compared with $341 million a year ago. Capital expenditure rose to $108 million from $64 million a year ago.
Guidance
For 2020, Edwards Lifesciences continues to expect sales in the range of $4-$4.5 billion. The Zacks Consensus Estimate for 2020 revenues is currently pegged at $4.26 billion. The company assumes a progressive recovery likely in the second half of the year. It however apprehends a challenging year-over-year comparison, as last-year sales had improved a robust 19%.
Full-year adjusted earnings per share has been raised to a new range of $1.75-$1.95 on a post-split basis, compared to the previous guidance of $1.58-$1.75 (pre-split basis was $4.75-$5.25). The Zacks Consensus Estimate for the same is currently pinned at $1.66.
For the third quarter, the company projects sales in the range of $1- $1.2 billion. The Zacks Consensus Estimate for the same is currently pegged at $1.05 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 5.91% due to these changes.
VGM Scores
At this time, Edwards Lifesciences has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Edwards Lifesciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.