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Shares of Edwards Lifesciences (EW - Free Report) reached a new 52-week high of $95.27 on Mar 14, 2024, before closing the session marginally lower at $93.36.
In the past year, this Zacks Rank #2 (Buy) stock has gained 13.9% compared with the 11.5% rise of the industry and the S&P 500 composite’s rise of 30.2%.
Over the past five years, Edwards Lifesciences registered earnings growth of 9.9% compared with the industry’s 8.5% rise. The company’s expected 2024 earnings growth rate of 9.9% compares favorably with the industry’s projected growth of 9.2%. EW’s earnings surpassed the Zacks Consensus Estimates in two of the past four quarters and came in line on two occasions, the average surprise being 0.8%.
EW is witnessing an upward trend in its stock price, prompted by the promising prospects of the Critical Care spin-off for the Surgical Structural Heart business. The optimism led by a remarkable fourth-quarter 2023 performance, as well as nearing an inflection point with TMTT (Transcatheter Mitral and Tricuspid Therapies), is expected to contribute further. However, macroeconomic concerns and adverse currency impacts are major downsides.
Let’s delve deeper.
Key Growth Drivers
Critical Care Spin-Off Optimistic for Structural Heart Opportunities: In December 2023, Edwards announced the strategic decision to spin off the Critical Care segment at the end of 2024. The tax-free spin-off will allow the company to pursue more opportunities for TAVR (Transcatheter Aortic Valve Replacement), TMTT and Surgical patients, as well as new investments in interventional heart failure technologies.
For investors’ note, Critical Care is one of the company’s rapidly growing businesses. In the fourth quarter of 2023, the business generated 11% year-over-year sales growth, driven by contributions from all product lines, including HemoSphere and Smart Recovery, with the strong adoption of the Acumen IQ sensor equipped with the Hypotension Prediction Index algorithm.
Image Source: Zacks Investment Research
As an independent public company following the spin-off, the segment will capitalize on its global leadership position in advanced patient monitoring, transforming care through AI-enabled smart monitoring solutions while expanding its reach to millions of patients around the world. With a rich legacy of pioneering innovations, the planned separation paves an even stronger future for this segment.
TMTT Portfolio Holds Potential: Leveraging insights from clinical trials and real-world experiences, the company has strategically developed a portfolio of leading transcatheter technologies to provide both repair and replacement solutions for mitral and tricuspid patients. In the fourth quarter of 2023, sales increased a staggering 71% year over year, driven by the accelerated adoption of the differentiated PASCAL precision platform and the activation of more centers across the United States and Europe.
The ongoing double-digit growth of the overall transcatheter edge-to-edge repair procedure highlights a largely unmet patient need. During the year, the company’s PASCAL Precision was approved in Japan to treat patients with degenerative mitral regurgitation. In mitral replacement, Edwards received FDA approval for the SAPIEN 3 continued access program. Further, the EVOQUE system became the world's first transcatheter valve replacement therapy to receive regulatory approval to treat TR (tricuspid regurgitation).
Robust Q4 Performance: The company’s impressive 2023 fourth-quarter performance was driven by its broad portfolio of innovative therapies. Edwards Lifesciences delivered strong growth across each of its four product groups, which raises our optimism. The solid uptick in the top line also highlighted strengthening leadership in the TAVR segment. The ongoing expansion and adoption of the SAPIEN 3 Ultra RESILIA platform in the United States appears encouraging.
Downsides
Macro Concerns Put Pressure on the Bottom Line: Despite the improved conditions post-COVID-19, Edwards Lifesciences acknowledges the lingering impacts felt throughout 2023, particularly in Japan and staffing shortages in the United States and Europe. Additionally, the company has been grappling with escalated expenses for a while. In the fourth quarter of 2023, both SG&A and R&D expenses increased 16.8% and 16.3%, respectively, year over year. The quarter’s gross margin crashed 416 basis points (bps) while the operating margin declined 532 bps.
Foreign Exchange Impacts: Foreign exchange is a major headwind for Edwards Lifesciences due to a considerable percentage of its revenues coming from outside the United States. In the fourth quarter of 2023, foreign exchange rates decreased reported sales growth by 80 basis points (bps) or $9 million compared to the prior year. The quarter’s gross margin was also down 320 bps year over year due to negative foreign exchange rates.
Cardinal Health, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 14.2% compared with the industry’s 11.6%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health’s shares have gained 55.9% compared with the industry’s 15.9% rise in the past year.
Stryker, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.3%. SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.1%.
Shares of the company have increased 29.2% compared with the industry’s 8.7% rise over the past year.
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term earnings growth rate of 12.1% compared with the industry’s 11.9%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%.
Shares of DVA have surged 74.3% compared with the industry’s 24.5% rise over the past year.
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Edwards Lifesciences (EW) Hits 52-Week High: What's Driving It?
Shares of Edwards Lifesciences (EW - Free Report) reached a new 52-week high of $95.27 on Mar 14, 2024, before closing the session marginally lower at $93.36.
In the past year, this Zacks Rank #2 (Buy) stock has gained 13.9% compared with the 11.5% rise of the industry and the S&P 500 composite’s rise of 30.2%.
Over the past five years, Edwards Lifesciences registered earnings growth of 9.9% compared with the industry’s 8.5% rise. The company’s expected 2024 earnings growth rate of 9.9% compares favorably with the industry’s projected growth of 9.2%. EW’s earnings surpassed the Zacks Consensus Estimates in two of the past four quarters and came in line on two occasions, the average surprise being 0.8%.
EW is witnessing an upward trend in its stock price, prompted by the promising prospects of the Critical Care spin-off for the Surgical Structural Heart business. The optimism led by a remarkable fourth-quarter 2023 performance, as well as nearing an inflection point with TMTT (Transcatheter Mitral and Tricuspid Therapies), is expected to contribute further. However, macroeconomic concerns and adverse currency impacts are major downsides.
Let’s delve deeper.
Key Growth Drivers
Critical Care Spin-Off Optimistic for Structural Heart Opportunities: In December 2023, Edwards announced the strategic decision to spin off the Critical Care segment at the end of 2024. The tax-free spin-off will allow the company to pursue more opportunities for TAVR (Transcatheter Aortic Valve Replacement), TMTT and Surgical patients, as well as new investments in interventional heart failure technologies.
For investors’ note, Critical Care is one of the company’s rapidly growing businesses. In the fourth quarter of 2023, the business generated 11% year-over-year sales growth, driven by contributions from all product lines, including HemoSphere and Smart Recovery, with the strong adoption of the Acumen IQ sensor equipped with the Hypotension Prediction Index algorithm.
Image Source: Zacks Investment Research
As an independent public company following the spin-off, the segment will capitalize on its global leadership position in advanced patient monitoring, transforming care through AI-enabled smart monitoring solutions while expanding its reach to millions of patients around the world. With a rich legacy of pioneering innovations, the planned separation paves an even stronger future for this segment.
TMTT Portfolio Holds Potential: Leveraging insights from clinical trials and real-world experiences, the company has strategically developed a portfolio of leading transcatheter technologies to provide both repair and replacement solutions for mitral and tricuspid patients. In the fourth quarter of 2023, sales increased a staggering 71% year over year, driven by the accelerated adoption of the differentiated PASCAL precision platform and the activation of more centers across the United States and Europe.
The ongoing double-digit growth of the overall transcatheter edge-to-edge repair procedure highlights a largely unmet patient need. During the year, the company’s PASCAL Precision was approved in Japan to treat patients with degenerative mitral regurgitation. In mitral replacement, Edwards received FDA approval for the SAPIEN 3 continued access program. Further, the EVOQUE system became the world's first transcatheter valve replacement therapy to receive regulatory approval to treat TR (tricuspid regurgitation).
Robust Q4 Performance: The company’s impressive 2023 fourth-quarter performance was driven by its broad portfolio of innovative therapies. Edwards Lifesciences delivered strong growth across each of its four product groups, which raises our optimism. The solid uptick in the top line also highlighted strengthening leadership in the TAVR segment. The ongoing expansion and adoption of the SAPIEN 3 Ultra RESILIA platform in the United States appears encouraging.
Downsides
Macro Concerns Put Pressure on the Bottom Line: Despite the improved conditions post-COVID-19, Edwards Lifesciences acknowledges the lingering impacts felt throughout 2023, particularly in Japan and staffing shortages in the United States and Europe. Additionally, the company has been grappling with escalated expenses for a while. In the fourth quarter of 2023, both SG&A and R&D expenses increased 16.8% and 16.3%, respectively, year over year. The quarter’s gross margin crashed 416 basis points (bps) while the operating margin declined 532 bps.
Foreign Exchange Impacts: Foreign exchange is a major headwind for Edwards Lifesciences due to a considerable percentage of its revenues coming from outside the United States. In the fourth quarter of 2023, foreign exchange rates decreased reported sales growth by 80 basis points (bps) or $9 million compared to the prior year. The quarter’s gross margin was also down 320 bps year over year due to negative foreign exchange rates.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Cardinal Health (CAH - Free Report) , Stryker (SYK - Free Report) and DaVita (DVA - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 14.2% compared with the industry’s 11.6%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health’s shares have gained 55.9% compared with the industry’s 15.9% rise in the past year.
Stryker, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.3%. SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.1%.
Shares of the company have increased 29.2% compared with the industry’s 8.7% rise over the past year.
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term earnings growth rate of 12.1% compared with the industry’s 11.9%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%.
Shares of DVA have surged 74.3% compared with the industry’s 24.5% rise over the past year.