Edwards Lifesciences Corporation EW is gaining investors’ confidence on positive fourth-quarter results. The company continues to witness increased adoption of the company's premium RESILIA technologies around the world. However, forex woes and stiff rivalry raise apprehensions.
Year-to-date, this Zacks Rank #2 (Buy) stock has gained 19% compared with a 6.7% rise of the industry it belongs to and a 8.3% decline of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $55.21 billion. The company’s long-term expected growth rate of 6.8%.
Let’s delve deeper.
Q4 Upsides: Edwards Lifesciences exited the fourth quarter of 2022 on a bullish note with better-than-expected earnings and revenues. The company also registered year-over-year growth on both fronts. The company’s TMTT segment registered strong growth driven by the continued adoption of the PASCAL platform in Europe. During the quarter, the company initiated the launch of the PASCAL platform in the United States. Further, growth within Surgical Structural Heart was boosted by the increased adoption of the company's premium RESILIA technologies around the world, including the recent launch of the company's MITRIS surgical mitral valve.
Surgical Structural Heart, a Promising Business: In the fourth quarter, the company’s Surgical Structural Heart sales increased 8.1% on an underlying basis. The company sees strong global growth, driven by the increased penetration of premium RESILIA products despite COVID challenges in certain regions.
Edwards Lifesciences continues to believe that physicians value the features and benefits of this advanced tissue technology for aortic and mitral surgical valve replacement procedures. The company expects underlying sales growth for 2022 in the mid-single-digit range, driven by advanced technologies and growth of overall heart valve surgeries.
Long-Term Growth Strategy Buoys Optimism: EW intends to maintain its leadership position in the global TAVR market through increased focus on expanding patient access by actively leveraging current valve platforms for additional indications. This includes developing next-generation valve platforms and maintaining trusted relationships with clinicians, payers and regulators.
With patients and clinicians increasingly preferring TAVR and based on the substantial body of compelling clinical evidence and the strong adoption of its TAVR devices, management remains optimistic about the long-term growth opportunity of its transcatheter therapies in the global market. Edwards Lifesciences is also committed to heavily invest in structural heart disease and critical care technologies.
Competitive Landscape: The medical devices industry is highly competitive with the presence of several competent players. In Heart Valve Therapy, Edwards Lifesciences competes with Medtronic and Sorin Group whereas players like ICU Medical, Pulsion Medical Systems AG, LiDCO Group and Becton, Dickinson offer competition in the other segments.
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Foreign Woes: Unfavorable foreign currency impact has been affecting Edward Lifesciences’ gross margin in the past few quarters. Per management, significant currency fluctuations could have a material effect on revenues, cost of sales and operational results.
In the past 60 days, the Zacks Consensus Estimate for Edwards Lifesciences’ earnings for 2023 has remained constant at $2.52.
The Zacks Consensus Estimate for 2023 revenues is pegged at $5.85 billion, suggesting a 8.8% rise from the 2022 reported number.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Hologic, Inc. HOLX, Becton, Dickinson and Company BDX and Avanos Medical, Inc. AVNS.
Hologic, carrying a Zacks Rank #2, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic has gained 1.7% compared with the industry’s 17.5% growth in the past year.
Becton, Dickinson and Company, carrying a Zacks Rank #2, has an estimated long-term growth of 7.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.47%.
So far this year, BDX’s shares have lost 0.2% against the industry’s 8% growth.
Avanos, carrying a Zacks Rank #2, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 13.7% compared with the industry’s 17.5% decline in the past year.
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