For Immediate Release
Chicago, IL – November 20, 2019 – Zacks Equity Research Shares of Edwards Lifesciences Corp. (EW - Free Report) as the Bull of the Day, Fossil Group, Inc. (FOSL - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on United Airlines Holdings (UAL - Free Report) and Boeing (BA - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Edwards Lifesciences Corp.remains one of the top healthcare stocks on the Street. This Zacks Rank #1 (Strong Buy) is expected to grow earnings and revenue by the double digits in 2019.
Edwards Lifesciences makes devices that are focused on structural heart disease and critical care monitoring.
A Big Beat in the Third Quarter
On Oct 23, Edwards Lifesciences reported its third quarter results. It easily beat the Zacks Consensus by 19 cents, reporting $1.41 versus the consensus of $1.22.
It was the third earnings beat in a row.
Sales were up 21% to $1.1 billion with Transcatheter Aortic Valve Replacement (TAVR) sales up 26% year-over-year to $700 million, or up 27% on an underlying basis. Global average selling prices remained stable.
It is modeling a return to low double-digit global TAVR procedure growth in 2020.
It is also running trials on its portfolio of technologies for the Transcatheter Mitral and Tricuspid Therapies (TMTT).
Surgical Structural Heart sales jumped 11% to $204 million, or were up 3% on an underlying basis.
Critical Care sales gained 10% to $180 million, or were up 7% on an underlying basis. All product categories and geographies contributed in the quarter.
The FDA also approved SAPIEN 3 and SAPIEN 3 Ultra systems indication expansion.
Raised Full Year Guidance
Edwards was bullish on the rest of the year.
It now expects full year sales to be at the top of its previous range of $4 billion to $4.3 billion. Analysts expect sales to be up 15.3% in 2019.
It also raised full year 2019 EPS guidance to $5.50 to $5.65 from its prior guidance to $5.20 to $5.40.
11 analysts raised their estimates after the report to get inline with guidance. The Zacks Consensus Estimate jumped to $5.60 from $5.33 during that time.
That is earnings growth of 19.2% as it made just $4.70 in 2018.
Analysts are also bullish on 2020 as 10 estimates were revised higher as well.
The 2020 Zacks Consensus Estimate rose to $6.15 from $5.97 over the last month. That's further earnings growth of 9.9%.
Shares Soar in 2019
With business humming along, so are the shares as they've soared 63% year-to-date to all-time highs.
The company now has a market cap of $50 billion.
It's not a cheap stock. It is trading with a forward P/E of 43.
But for investors looking for a hot growth stock in the medical device industry, Edwards Lifesciences is one to keep on the short list.
Bear of the Day:
Fossil Group, Inc.continues to struggle with its turnaround strategy. This Zacks Rank #5 (Strong Sell) is expected to see its earnings decline 84.6% year-over-year.
Fossil makes specialized lifestyle accessories including fashion watches, jewelry, handbags, small leather goods and wearables.
It owns several well known brands including Fossil, Michele, Misfit, Relic, Skagen and Zodiac. It's licensed brands include Armani Exchange, BMW, Chaps, Diesel, DKNY, Emporio Armani, kate spade new york, Michael Kors, PUMA and Tory Burch.
A Big Miss in the Third Quarter
On Nov 6, Fossil reported its third quarter earnings and missed the Zacks Consensus by 137%, or $0.55. Earnings were a loss of $0.15 versus the consensus of $0.40.
Net sales fell 11% to $539.5 million, or a 10% decline on a constant currency.
The contraction sales was primarily due to negative currency effects, store closures and business exits, lower
inventory liquidation levels, and a reduction of sales in the lower margin off-price channel. Both the Americas and Europe saw declines.
The Americas fell 18% while Europe fell 16%. Those declines were partially offset by Asia, where sales rose 9% thanks to a strong watch category and e-commerce channel performance in mainland China, India and Korea.
Watches declined in the Americas and Europe and increase in Asia.
Global retail comps fell 2% year-over-year. The Americas outlet stores and e-commerce in Asia and Europe saw positive comps but there were declines in Americas e-commerce and declines in the full-price stores.
Watch comps were positive but were offset by negative leather and jewelry comps.
As the company puts its New World Fossil 2.0 Transform to Grow initiative in place, it expects continue declines in margins and higher costs.
As a result, the analysts have slashed both 2019 and 2020 earnings estimates.
The 2019 Zacks Consensus Estimate has fallen to $0.12 versus $1.49 just 30 days ago. That's a decline of 84.6% as the company made $0.78 a year ago.
The 2020 Zacks Consensus Estimate has plunged to $0.15 from $1.68 over the last month.
Shares Near 5-Year Lows
It's been a rough 5 years for Fossil as smart watches have eaten into demand for standard watches. Shares are down 93% over the last 5 years.
Are they cheap?
Now that earnings have been slashed, it's now trading with a forward P/E of 60. It's not cheap by a P/E method.
Watches are a difficult retail market. Even with a turnaround program, sales continue to struggle.
United (UAL - Free Report) Suspends Boeing (BA - Free Report) MAX Flights Until March 2020
United Airlines Holdingshas once again extended the grounding period of its Boeing 737 MAX jets as uncertainty looms over the aircraft’s return to service. The carrier, which has 14 such jets in its fleet, has now suspended all flights on the Boeing 737 MAX aircraft through Mar 4, 2020. It had previously expected the aircraft to remain grounded until Jan 6.
The airline had earlier stated that the ongoing groundings are likely to induce 93 flight cancellations per day in November and 75 each in December. Absence of the jets during the busy Christmas season is expected to dent United Airlines' top line in the current year.
Earlier this month, American and Southwest extended the suspension period of the MAX aircraft through early March 2020. As the groundings began in March 2019, following two successive deadly air crashes involving this aircraft model, these carriers including United Airlines had to extend the grounding period of the controversial aircraft a number of times.
Amid such large-scale ambiguity revolving around the aircraft’s return to service, last week, Boeing said the Federal Aviation Administration could approve the software fixes on the plane as early as December and the agency might as well approve the fixes on the new pilot training program in January itself.
United Airlines carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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