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Here's Why You Should Invest in Edward Lifesciences (EW) Now
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Edwards Lifesciences Corporation (EW - Free Report) is well-poised to grow in the coming quarters, backed by the growth momentum in global TAVR sales, including the strong adoption of the SAPIEN family of valves. Within Critical Care, contributions from all product lines in the second quarter of 2023 appear promising. The company’s strong liquidity position makes it an attractive stock for investors.
Meanwhile, elevated expenses are adversely affecting EW’s margins. Over the past few quarters, the adverse foreign currency impact has been dragging the company’s gross margin, which does not bode well for the stock.
In the past year, this Zacks Rank #3 (Hold) stock has decreased 22.1% compared with the 2.2% fall of the industry and a 14% rise of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $45.51 billion. Edward Lifesciences has an earnings yield of 3.41% compared to the industry’s -7.11%. Edward Lifesciences’ earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 1.62%.
Let’s delve deeper.
Upsides
TAVR Looks Promising: Across the product group, Edwards Lifesciences’ sales growth continues to be driven by its leading SAPIEN platform. In the second quarter, TAVR sales in the United States were particularly aided by improved hospital staffing levels and the continued SAPIEN 3Ultra RESILIA launch.
Image Source: Zacks Investment Research
Outside the United States, in the upcoming period, TAVR sales growth in Japan is expected to improve as markets continue to recover from lingering pandemic headwinds. In Europe, the company’s sales growth continues to be broad-based by country, led by the demand for the SAPIEN platform.
Critical Care Business Holds Potential: Edwards Lifesciences is a leading player, particularly in advanced hemodynamic monitoring systems. These are used to measure a patient's heart function and fluid status in surgical and intensive care settings.
The company is currently driving the adoption of its Smart Recovery Technologies as well as the Acumen IQ sensor. EW’s HemoSphere monitoring platform continued its sales momentum in the second quarter of 2023, along with a healthy pipeline of future opportunities.
Strong Solvency and Capital Structure: Edwards Lifesciences has a solid balance sheet position. At the end of the second quarter of 2023, the company reported total debt of $597 million and a cash and cash equivalent (including short-term investments) balance of $1.51 billion, indicating a sound financial position. Edwards Lifesciences did not have any current maturities of long-term debt.
Further, the company’s debt to capital was 8.5% at the second quarter-end, better than 9% at the end of the fourth quarter of 2022.
Downsides
Escalated Expenses: Edwards Lifesciences has been grappling with escalated expenses for a while. In the second quarter of 2023, high SG&A expenses were driven by performance-based compensations and investments in transcatheter field-based personnel in support of EW’s growth strategy. In addition, the gross and adjusted operating margins declined in the quarter, which raises concern.
Foreign Exchange Headwinds: In the second quarter of 2023, foreign exchange rates decreased reported sales growth by 70 basis points or $8 million compared to 2022. The company also posted a lower year-over-year adjusted gross profit margin of 77.7% due to a less favorable impact of foreign exchange.
Estimate Trend
The Zacks Consensus Estimate for Edwards Lifesciences’ 2023 earnings per share (EPS) has remained constant at $2.55 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $6.01 billion. This suggests an 11.7% rise from the year-ago reported number.
Haemonetics has an earnings yield of 4.23% against the industry’s -1.33%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have risen 14.4% against the industry’s 6.7% decline in the past year.
SiBone, carrying a Zacks Rank #2 (Buy) at present, has a long-term estimated earnings growth rate of 22.9% compared with the industry’s 16.5%. Shares of the company have rallied 23.7% against the industry’s 6.1% decline over the past year.
SIBN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.37%.
Quanterix, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 62.8% for the current year compared with the industry’s 15.2%. Shares of QTRX have risen 142.4% against the industry’s 6.7% decline over the past year.
Quanterix’s earnings surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
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Here's Why You Should Invest in Edward Lifesciences (EW) Now
Edwards Lifesciences Corporation (EW - Free Report) is well-poised to grow in the coming quarters, backed by the growth momentum in global TAVR sales, including the strong adoption of the SAPIEN family of valves. Within Critical Care, contributions from all product lines in the second quarter of 2023 appear promising. The company’s strong liquidity position makes it an attractive stock for investors.
Meanwhile, elevated expenses are adversely affecting EW’s margins. Over the past few quarters, the adverse foreign currency impact has been dragging the company’s gross margin, which does not bode well for the stock.
In the past year, this Zacks Rank #3 (Hold) stock has decreased 22.1% compared with the 2.2% fall of the industry and a 14% rise of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $45.51 billion. Edward Lifesciences has an earnings yield of 3.41% compared to the industry’s -7.11%. Edward Lifesciences’ earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 1.62%.
Let’s delve deeper.
Upsides
TAVR Looks Promising: Across the product group, Edwards Lifesciences’ sales growth continues to be driven by its leading SAPIEN platform. In the second quarter, TAVR sales in the United States were particularly aided by improved hospital staffing levels and the continued SAPIEN 3Ultra RESILIA launch.
Image Source: Zacks Investment Research
Outside the United States, in the upcoming period, TAVR sales growth in Japan is expected to improve as markets continue to recover from lingering pandemic headwinds. In Europe, the company’s sales growth continues to be broad-based by country, led by the demand for the SAPIEN platform.
Critical Care Business Holds Potential: Edwards Lifesciences is a leading player, particularly in advanced hemodynamic monitoring systems. These are used to measure a patient's heart function and fluid status in surgical and intensive care settings.
The company is currently driving the adoption of its Smart Recovery Technologies as well as the Acumen IQ sensor. EW’s HemoSphere monitoring platform continued its sales momentum in the second quarter of 2023, along with a healthy pipeline of future opportunities.
Strong Solvency and Capital Structure: Edwards Lifesciences has a solid balance sheet position. At the end of the second quarter of 2023, the company reported total debt of $597 million and a cash and cash equivalent (including short-term investments) balance of $1.51 billion, indicating a sound financial position. Edwards Lifesciences did not have any current maturities of long-term debt.
Further, the company’s debt to capital was 8.5% at the second quarter-end, better than 9% at the end of the fourth quarter of 2022.
Downsides
Escalated Expenses: Edwards Lifesciences has been grappling with escalated expenses for a while. In the second quarter of 2023, high SG&A expenses were driven by performance-based compensations and investments in transcatheter field-based personnel in support of EW’s growth strategy. In addition, the gross and adjusted operating margins declined in the quarter, which raises concern.
Foreign Exchange Headwinds: In the second quarter of 2023, foreign exchange rates decreased reported sales growth by 70 basis points or $8 million compared to 2022. The company also posted a lower year-over-year adjusted gross profit margin of 77.7% due to a less favorable impact of foreign exchange.
Estimate Trend
The Zacks Consensus Estimate for Edwards Lifesciences’ 2023 earnings per share (EPS) has remained constant at $2.55 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $6.01 billion. This suggests an 11.7% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , SiBone (SIBN - Free Report) and Quanterix (QTRX - Free Report) .
Haemonetics has an earnings yield of 4.23% against the industry’s -1.33%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have risen 14.4% against the industry’s 6.7% decline in the past year.
HAE sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
SiBone, carrying a Zacks Rank #2 (Buy) at present, has a long-term estimated earnings growth rate of 22.9% compared with the industry’s 16.5%. Shares of the company have rallied 23.7% against the industry’s 6.1% decline over the past year.
SIBN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.37%.
Quanterix, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 62.8% for the current year compared with the industry’s 15.2%. Shares of QTRX have risen 142.4% against the industry’s 6.7% decline over the past year.
Quanterix’s earnings surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.