A month has gone by since the last earnings report for Edwards Lifesciences (
EW Quick Quote EW - Free Report) . Shares have lost about 2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Edwards Lifesciences due for a breakout? 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 catalysts.
Edwards Lifesciences Tops Q4 Earnings, Margins Expanded
Edwards Lifesciences delivered fourth-quarter 2022 adjusted earnings per share of 64 cents, beating the Zacks Consensus Estimate by 4.9%. The figure also improved 25.5% year over year.
Full-year adjusted earnings per share was $2.48, up 11.7% from the year-ago number. The metric surpassed the Zacks Consensus Estimate by 1.2%.
Our model projected an adjusted EPS of 58 cents for Q4 and $2.42 per share for full-year 2022.
GAAP earnings per share was 65 cents in the quarter, up 22.6% year over year.
Full-year GAAP earnings per share was $2.44, reflecting an 2.5% rise from the year-earlier figure.
Our model projected an GAAP earnings per share of 58 cents for Q4 and $2.37 per share for full-year 2022.
Fourth-quarter net sales were $1.35 billion, up 1.4% year over year on a reported basis. The metric topped the Zacks Consensus Estimate by 1.3%.
The fourth-quarter revenue compares to our estimate of $1.34 billion.
Full-year revenues were $5.38 billion, reflecting a 2.9% increase from the year-ago period. However, revenues missed the Zacks Consensus Estimate by 0.4%. Segmental Details
In the fourth quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $867.7 million, down 0.4% year-over-year. On an underlying basis, growth was 4.8%. In the United States, TAVR procedures increased in mid-single digits year over year.
Transcatheter Mitral and Tricuspid Therapies sales totaled $31.5 million, up 24.5% from the prior-year quarter’s figure on a reported basis. On an underlying basis, the upside was 36.2%. The growth was led by the continued adoption of the PASCAL platform in Europe.
Surgical Structural Heart sales in the quarter totaled $224.1 million, up 1.2% from the year-ago quarter on a reported basis and 8.1% on an underlying basis. The growth was backed by increased adoption of the company's premium RESILIA technologies around the world, including the recent launch of the company's MITRIS surgical mitral valve.
Critical Care sales totaled $225 million in the fourth quarter, up 6.3% from the year-ago quarter on a reported basis and up 13.4% on an underlying basis. Sales growth was driven by contributions from all product lines and regions, led by the HemoSphere platform and Smart Recovery technologies.
In the fourth quarter, gross profit was $1.09 billion, up 6.9%. The gross margin expanded 415 basis points (bps) to 80.9%.
Our model projected a gross margin of 80% for Q4.
The company-provided adjusted gross margin was 81%, a 420 basis-point expansion year over year. This increase was driven by the expected positive impact from the company's FX program, which includes hedge contract gains and natural hedges that offset the negative sales impact from the weakening of the Euro and Yen against the dollar.
Selling, general and administrative expenses fell 3.1% year over year to $411 million. Research and development expenditures were $232.2 million, down 0.3% year over year.
During the reported quarter, operating income rose 23.1% year over year to $447.2 million. The operating margin expanded 584 bps to 33.2%.
The adjusted operating margin, according to our model, was 31.3% for Q4.
Edwards Lifesciences exited 2022, with cash and cash equivalents and short-term investments of $1. 22 billion compared with $1.47 billion recorded at the end of 2021. Long-term debt was $596.3 million at the end of 2022, compared with $595.7 million at 2022.
The company has reaffirmed its guidance for full-year 2023 as provided at the December investor conference.
The company expects full-year 2023 adjusted earnings per share to grow in the range of $2.45 to $2.60. The Zacks Consensus Estimate for the metric is pegged at $2.49.
The full-year 2023 sales expectation was reiterated in the range of $5.60-$6.00 billion. The Zacks Consensus Estimate for the same is pegged at $5.77 billion.
For the first quarter of 2023, Edwards Lifesciences projects total sales in the range of $1.37 and $1.45 billion. The Zacks Consensus Estimate for the fourth-quarter revenues is pegged at 1.37 billion.
The adjusted EPS is expected in the band of 58 to 64 cents. The Zacks Consensus Estimate for the fourth-quarter earnings is pegged at 59 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
At this time, Edwards Lifesciences has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Edwards Lifesciences has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.