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Here's Why You Should Retain Edwards Lifesciences (EW) Stock
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Edwards Lifesciences (EW - Free Report) is well poised for growth in the coming months, backed by continued strong adoption of the SAPIEN 3 Ultra platform and the PASCAL system across Europe. Strong HemoSphere sales in the United States look impressive. However, downsides may result from foreign exchange fluctuations and stiff competition.
Over the past year, shares of this Zacks Rank #3 (Hold) company have gained 29.1% versus 8.3% fall of the industry and 20.7% rise of the S&P 500.
The company, aimed at treating advanced cardiovascular diseases, especially structural heart disease, has a market capitalization of $67.66 billion. The company projects 14% growth for the next five years. The company surpassed estimates in the trailing three quarters and missed the same in one, the average surprise being 6.47%.
Riding on current business growth and bullish near-term prospects, the company is worth holding on to for now.
Key Growth Catalysts
Critical Care Business Holds Potential Amid Pandemic: The segment registered growth compared to the year-ago 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. Further, True Wave disposable pressure monitoring devices used in the ICU witnessed high demand due to the elevated hospitalizations and demand for products used in high-risk surgery also grew year over year. Additionally, the company witnessed high demand for the ClearSight non-invasive finger cup used in elective procedures during the quarter.
TAVR Holds Potential: The TAVR segment, during the fourth quarter, has performed well despite the pandemic-led business challenges. The segment registered 12.3% growth from the prior-year figure on a reported basis and 13.2% on an underlying basis. The growth was primarily driven by increased adoption of the company’s technologies, including the SAPIEN platform. Customer adoption for the SAPIEN 3 Ultra platform remains strong due to its low complication rates and easy-to-use design. During the fourth quarter, strong TAVR adoption continued in Japan.
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Long-Term Growth Strategy Buoys Optimism: Edwards Lifesciences expects to maintain its leadership position in the global TAVR market through 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. Edwards Lifesciences expects the global TAVR opportunity to double to $10 billion by 2028. Also, management projects TMTT opportunity estimated to be $5 billion by 2028.
Downsides
Foreign Exchange Headwinds: We are worried about the significant challenges Edward Lifesciences had to face owing to unfavorable foreign currency impact that has been affecting the company’s 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.
Competitive Landscape: The medical devices industry is highly competitive with the presence of several competent players. In Heart Valve Therapy, Edwards Lifesciences primarily competes with Medtronic and Sorin Group, whereas players such as ICU Medical, Pulsion Medical Systems AG, LiDCO Group and Becton, Dickinson offer competition in the other segments.
Estimate Trends
For the current year, Edwards Lifesciences is witnessing a neutral estimate trend. In the past 60 days, the Zacks Consensus Estimate for earnings has been constant at $2.56.
The Zacks Consensus Estimate for 2022 revenues is pegged at $5.72 billion, suggesting 9.4% growth from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Laboratory Corporation of America Holdings (LH - Free Report) .
AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. AMN Healthcare surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 23.8% versus the 62% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 21.86%. It currently carries a Zacks Rank #2 (Buy).
Henry Schein has gained 6.1% compared with the industry’s 1.7% rise over the past year.
Laboratory Corporation surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.7%. Laboratory Corporation currently sports a Zacks Rank #1.
Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. LH’s earnings yield of 9.4% compares favorably with the industry’s 3.4%.
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Here's Why You Should Retain Edwards Lifesciences (EW) Stock
Edwards Lifesciences (EW - Free Report) is well poised for growth in the coming months, backed by continued strong adoption of the SAPIEN 3 Ultra platform and the PASCAL system across Europe. Strong HemoSphere sales in the United States look impressive. However, downsides may result from foreign exchange fluctuations and stiff competition.
Over the past year, shares of this Zacks Rank #3 (Hold) company have gained 29.1% versus 8.3% fall of the industry and 20.7% rise of the S&P 500.
The company, aimed at treating advanced cardiovascular diseases, especially structural heart disease, has a market capitalization of $67.66 billion. The company projects 14% growth for the next five years. The company surpassed estimates in the trailing three quarters and missed the same in one, the average surprise being 6.47%.
Riding on current business growth and bullish near-term prospects, the company is worth holding on to for now.
Key Growth Catalysts
Critical Care Business Holds Potential Amid Pandemic: The segment registered growth compared to the year-ago 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. Further, True Wave disposable pressure monitoring devices used in the ICU witnessed high demand due to the elevated hospitalizations and demand for products used in high-risk surgery also grew year over year. Additionally, the company witnessed high demand for the ClearSight non-invasive finger cup used in elective procedures during the quarter.
TAVR Holds Potential: The TAVR segment, during the fourth quarter, has performed well despite the pandemic-led business challenges. The segment registered 12.3% growth from the prior-year figure on a reported basis and 13.2% on an underlying basis. The growth was primarily driven by increased adoption of the company’s technologies, including the SAPIEN platform. Customer adoption for the SAPIEN 3 Ultra platform remains strong due to its low complication rates and easy-to-use design. During the fourth quarter, strong TAVR adoption continued in Japan.
Long-Term Growth Strategy Buoys Optimism: Edwards Lifesciences expects to maintain its leadership position in the global TAVR market through 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. Edwards Lifesciences expects the global TAVR opportunity to double to $10 billion by 2028. Also, management projects TMTT opportunity estimated to be $5 billion by 2028.
Downsides
Foreign Exchange Headwinds: We are worried about the significant challenges Edward Lifesciences had to face owing to unfavorable foreign currency impact that has been affecting the company’s 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.
Competitive Landscape: The medical devices industry is highly competitive with the presence of several competent players. In Heart Valve Therapy, Edwards Lifesciences primarily competes with Medtronic and Sorin Group, whereas players such as ICU Medical, Pulsion Medical Systems AG, LiDCO Group and Becton, Dickinson offer competition in the other segments.
Estimate Trends
For the current year, Edwards Lifesciences is witnessing a neutral estimate trend. In the past 60 days, the Zacks Consensus Estimate for earnings has been constant at $2.56.
The Zacks Consensus Estimate for 2022 revenues is pegged at $5.72 billion, suggesting 9.4% growth from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Laboratory Corporation of America Holdings (LH - Free Report) .
AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. AMN Healthcare surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 23.8% versus the 62% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 21.86%. It currently carries a Zacks Rank #2 (Buy).
Henry Schein has gained 6.1% compared with the industry’s 1.7% rise over the past year.
Laboratory Corporation surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.7%. Laboratory Corporation currently sports a Zacks Rank #1.
Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. LH’s earnings yield of 9.4% compares favorably with the industry’s 3.4%.