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Edwards Lifesciences (EW) Down 9.3% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Edwards Lifesciences (EW - Free Report) . Shares have lost about 9.3% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Edwards Lifesciences Q2 Earnings Surpass, Margins Down
Edwards Lifesciences Corporation delivered adjusted earnings per share of 66 cents in second-quarter 2023, beating the Zacks Consensus Estimate by 1.5%. The figure also increased 4.8% year over year.
GAAP earnings were 50 cents per share in the quarter, down 23.1% year over year.
Sales Details
Second-quarter net sales were $1.53 billion, up 11.4% year over year on a reported basis. The metric topped the Zacks Consensus Estimate by 1.7%.
Segmental Details
In the second quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $991.6 million, up 9.3% year over year. On an underlying basis, growth was 9.8%. In the United States, Edwards' TAVR sales were aided by improved hospital staffing levels and the continued successful launch of SAPIEN 3 Ultra RESILIA. This figure compares with our second quarter’s TAVR model’s projection of $960.6 million.
Transcatheter Mitral and Tricuspid Therapies (TMTT) sales totaled $47.6 million, up 71.4% from the prior-year quarter’s figure on a reported basis. On an underlying basis, the upside was 69.2%. The uptick is driven by overall transcatheter edge-to-edge repair procedure growth and the ongoing launch and growing adoption of the PASCAL Precision system in Europe and the United States. This figure compares with our second quarter’s TMTT model’s projection of $43.2 million.
Surgical Structural Heart sales in the quarter totaled $256.3 million, up 12.2% from the year-ago quarter’s levels on a reported basis and 13.3% on an underlying basis. Growth was driven by the adoption of Edwards' premium products across all regions. This figure compares with our second quarter’s Surgical Structural Heart model’s projection of $230.9 million.
Critical Care sales totaled $234.7 million in the second quarter, up 11.4% from the year-ago quarter’s levels on a reported basis and up 12.8% on an underlying basis. Sales growth was led by the Smart Recovery technology portfolio and strong adoption of the Acumen IQ sensor. This figure compares with our second quarter’s Critical Care model’s projection of $228 million.
Margins
In the second quarter, gross profit was $1.19 billion, up 7.5%. The gross margin contracted 281 basis points (bps) to 77.6%.
The company-provided adjusted gross margin was 77.7%, a 280 basis-point (bps) contraction year over year. This year-over-year reduction was due to a less favorable impact from foreign exchange.
SG&A expenses rose 14.6% year over year to $468.7 million. R&D expenditures were $270.3 million, down 7.8% year over year. During the reported quarter, operating income rose 0.8% year over year to $448.2 million. The operating margin contracted 308 bps to 29.3%.
Cash Position
Edwards Lifesciences exited second-quarter 2023 with cash and cash equivalents and short-term investments of $1.04 billion compared with $1.25 billion recorded at the end of first-quarter 2023. Long-term debt was $596.7 million at the end of second-quarter 2023 compared with $596.5 million at the end of first-quarter 2023.
Guidance
The company raised its guidance for full-year 2023.
The company expects full-year 2023 adjusted earnings per share to grow in the range of $2.50-$2.60 (compared with the previous guidance of $2.48-$2.60). The Zacks Consensus Estimate for the metric is pegged at $2.55.
Full-year 2023 sales are expected in the high range of $5.90-$6.10 billion (compared with the previous guidance of $5.60-$6.00 billion). The Zacks Consensus Estimate for the same is pegged at $5.96 billion.
For the third quarter of 2023, Edwards Lifesciences projects total sales in the range of $1.44-$1.52 billion. The Zacks Consensus Estimate for third-quarter revenues is pegged at 1.50 billion.
The adjusted earnings per share is expected in the band of 55-61 cents. The Zacks Consensus Estimate for third-quarter earnings is pegged at 65 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -6.59% due to these changes.
VGM Scores
At this time, Edwards Lifesciences has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Edwards Lifesciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Edwards Lifesciences (EW) Down 9.3% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Edwards Lifesciences (EW - Free Report) . Shares have lost about 9.3% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Edwards Lifesciences Q2 Earnings Surpass, Margins Down
Edwards Lifesciences Corporation delivered adjusted earnings per share of 66 cents in second-quarter 2023, beating the Zacks Consensus Estimate by 1.5%. The figure also increased 4.8% year over year.
GAAP earnings were 50 cents per share in the quarter, down 23.1% year over year.
Sales Details
Second-quarter net sales were $1.53 billion, up 11.4% year over year on a reported basis. The metric topped the Zacks Consensus Estimate by 1.7%.
Segmental Details
In the second quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $991.6 million, up 9.3% year over year. On an underlying basis, growth was 9.8%. In the United States, Edwards' TAVR sales were aided by improved hospital staffing levels and the continued successful launch of SAPIEN 3 Ultra RESILIA. This figure compares with our second quarter’s TAVR model’s projection of $960.6 million.
Transcatheter Mitral and Tricuspid Therapies (TMTT) sales totaled $47.6 million, up 71.4% from the prior-year quarter’s figure on a reported basis. On an underlying basis, the upside was 69.2%. The uptick is driven by overall transcatheter edge-to-edge repair procedure growth and the ongoing launch and growing adoption of the PASCAL Precision system in Europe and the United States. This figure compares with our second quarter’s TMTT model’s projection of $43.2 million.
Surgical Structural Heart sales in the quarter totaled $256.3 million, up 12.2% from the year-ago quarter’s levels on a reported basis and 13.3% on an underlying basis. Growth was driven by the adoption of Edwards' premium products across all regions. This figure compares with our second quarter’s Surgical Structural Heart model’s projection of $230.9 million.
Critical Care sales totaled $234.7 million in the second quarter, up 11.4% from the year-ago quarter’s levels on a reported basis and up 12.8% on an underlying basis. Sales growth was led by the Smart Recovery technology portfolio and strong adoption of the Acumen IQ sensor. This figure compares with our second quarter’s Critical Care model’s projection of $228 million.
Margins
In the second quarter, gross profit was $1.19 billion, up 7.5%. The gross margin contracted 281 basis points (bps) to 77.6%.
The company-provided adjusted gross margin was 77.7%, a 280 basis-point (bps) contraction year over year. This year-over-year reduction was due to a less favorable impact from foreign exchange.
SG&A expenses rose 14.6% year over year to $468.7 million. R&D expenditures were $270.3 million, down 7.8% year over year. During the reported quarter, operating income rose 0.8% year over year to $448.2 million. The operating margin contracted 308 bps to 29.3%.
Cash Position
Edwards Lifesciences exited second-quarter 2023 with cash and cash equivalents and short-term investments of $1.04 billion compared with $1.25 billion recorded at the end of first-quarter 2023. Long-term debt was $596.7 million at the end of second-quarter 2023 compared with $596.5 million at the end of first-quarter 2023.
Guidance
The company raised its guidance for full-year 2023.
The company expects full-year 2023 adjusted earnings per share to grow in the range of $2.50-$2.60 (compared with the previous guidance of $2.48-$2.60). The Zacks Consensus Estimate for the metric is pegged at $2.55.
Full-year 2023 sales are expected in the high range of $5.90-$6.10 billion (compared with the previous guidance of $5.60-$6.00 billion). The Zacks Consensus Estimate for the same is pegged at $5.96 billion.
For the third quarter of 2023, Edwards Lifesciences projects total sales in the range of $1.44-$1.52 billion. The Zacks Consensus Estimate for third-quarter revenues is pegged at 1.50 billion.
The adjusted earnings per share is expected in the band of 55-61 cents. The Zacks Consensus Estimate for third-quarter earnings is pegged at 65 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -6.59% due to these changes.
VGM Scores
At this time, Edwards Lifesciences has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Edwards Lifesciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.