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Will Edwards Lifesciences (EW) Gain on THVT in Q3 Earnings?

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Edwards Lifesciences Corporation (EW - Free Report)  is scheduled to report third-quarter 2017 earnings on Oct 24, after market close.

Last quarter, the company had posted a positive earnings surprise of 22.7%. It is worth noting that Edwards Lifesciences has outperformed the Zacks Consensus Estimate in three of the preceding four quarters, with an average positive earnings surprise of 10.8%. Let’s take a look at how things are shaping up prior to this announcement.

Key Catalyst

Similar to the prior quarter, Edwards Lifesciences is expected to gain from strength in Transcatheter Heart Valve Therapy segment (THVT). Banking on continued therapy adoption across all geographies with notable strength in the United States, the company is expected to maintain this bullish trend in the third quarter of 2017 as well.

Growth in THVT was driven by excellent clinical performance results from SAPIEN 3 as well continued strong therapy implementation across all regions in the last reported quarter. Moreover, with the receipt of expanded FDA approval for SAPIEN 3 valve in early June 2017 is expected to further boost the top line at the THVT segment in the to-be-reported quarter.

Also, the Zacks Consensus Estimate for THVT net sales of $496 million reflects an increase of 20.9% from the year-ago quarter. The Zacks Consensus Estimate for transcatheter heart valves (THV) sales in the United States of $322 million shows an increase of 23.8% from the year-ago quarter. Overall, third-quarter revenues are projected at $833.89 million.

Edwards Lifesciences Corporation Price and EPS Surprise

 

Here are the other factors that might influence Edwards Lifesciences’ third-quarter results:

In the domestic market, Edwards Lifesciences is expected to continue with its strong performance based on strength in THVT and two other segments — Surgical Heart Valve Therapy and Critical Care.

The company witnessed strength in Surgical Heart Valve Therapy on the back of strong uptake of the EDWARDS INTUITY Elite valve system. Progressing in Surgical Heart Valve Therapy, the company received FDA approval for INSPIRIS RESILIA aortic valves in July 2017. On the other hand, growth in Critical Care group was led by double-digit growth in Enhanced Surgical Recovery Program, especially in the United States.

Also, the Zacks Consensus Estimate for net sales in the United States of $467 million reflects an increase of 11.9% from the year-ago quarter.

Edwards Lifesciences earlier raised its full-year 2017 sales expectations to the high end of the previously provided range of $3.2-$3.4 billion.

Moreover, we note that the company projected total sales between $810 million and $850 million and adjusted earnings per share of 80 cents to 90 cents for the third quarter.

On the flip side, tough competition in the cardiac devices market and reimbursement issues continue to challenge the company.

We also believe that unfavorable foreign currency will affect the company’s gross margin in the to-be-reported quarter. Also, management expects the third quarter to be the seasonally lowest quarter, which adds to the concerns.

Here is what our quantitative model predicts:

Edwards Lifesciencesdoes not have the right combination of two main ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

Zacks ESP: The Earnings ESP forEdwards Lifesciences is -1.83%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Edwards Lifesciences carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of a positive earnings surprise.

Nonetheless, the Zacks Consensus Estimate for earnings of 87 cents reflects a 27.9% improvement on a year-over-year basis.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Abbott (ABT - Free Report) has an Earnings ESP of +0.17% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology, Inc. (ALGN - Free Report) has an Earnings ESP of +2.06% and a Zacks Rank #3.

Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +0.33% and a Zacks Rank #3.

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