Here's Why You Should Buy Edward Lifesciences (EW) Stock Now
Edwards Lifesciences Corporation EW is likely to grow in the coming quarters due to the solid pipeline of Critical Care innovations. In the second quarter of 2023, Surgical Structural Heart sales growth was driven by the adoption of Edwards' premium products and strength in valve surgery procedures, led by the improvement in healthcare staffing. The strong adoption of the SAPIEN family of valves continues to drive TAVR (Transcatheter Aortic Valve Replacement) sales growth.
Meanwhile, elevated expenses are adversely affecting EW’s margins. Further, competitive pressure may adversely affect the company’s performance.
In the past year, this Zacks Rank #2 (Buy) stock has decreased 17.3% compared with the 1.9% fall of the industry and a 16.8% rise of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $43.03 billion. 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
Solid Potential in Critical Care Business: This is Edwards Lifesciences’ one of the rapidly growing businesses. The company is a leading player, particularly in advanced hemodynamic monitoring systems used to measure a patient's heart function and fluid status in surgical and intensive care settings.
Image Source: Zacks Investment Research
Edwards Lifesciences is currently driving the adoption of its Smart Recovery Technologies and Acumen IQ sensor. The company’s state-of-the-art HemoSphere monitoring platform continued its sales momentum in the second quarter of 2023, coupled with a healthy pipeline of future opportunities.
Bright Prospects of Surgical Structural Heart Business: The growth of this business is driven by the increased penetration of Edwards Lifesciences’ premium RESILIA products across all regions. As hospital staffing levels gradually improve, advanced tissue technology continues to be prioritized for aortic and mitral surgical valve replacement procedures.
The company is growing a large body of RESILIA evidence with the MOMENTIS clinical study to demonstrate the durability of the RESILIA tissue in the mitral position. As bioprosthetic aortic valve replacement (AVR) extends to younger patients, tissue durability is becoming of paramount importance. The latest seven-year data from the COMMENCE aortic trial is expected to support the adoption of EW’s RESILIA family of products.
TAVR Holds Potential: 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.
The company recently noted that it would begin enrollment for the ALLIANCE pivotal trial, designed to study the next-generation TAVR technology, SAPIEN X4. Further, the ongoing launch of SAPIEN 3 Ultra RESILIA in Japan is likely to augment growth. In Europe, Edwards Lifesciences’ sales growth continues to be broad-based by country, led by the demand for the SAPIEN platform.
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, raising our concern.
Competitive Risks: The company faces substantial competition and competes with many technologies and companies of all sizes based on cost-effectiveness, technological innovations, product performance, brand name recognition, breadth of product offerings, product advantages, pricing and availability and rate of reimbursement. Without the timely innovation and development of products, EW stands at the risk of its products becoming obsolete or less competitive because of the introduction of its competitor’s newer technologies or changing customer preferences.
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.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Haemonetics HAE, Align Technology ALGN and Cardinal Health CAH.
Haemonetics has an estimated earnings growth rate of 26.1% for fiscal 2024 compared with the industry’s 18.7%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have rallied 13.1% against the industry’s 10.3% fall in the past year.
HAE carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 17.5% compared with the industry’s 12.8%. Shares of the company have increased 29.7% compared with the industry’s 19.1% growth over the past year.
ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once. In the last reported quarter, it delivered an average earnings surprise of 9.9%.
Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 14.2% compared with the industry’s 12.8%. Shares of CAH have rallied 31.1% compared with the industry’s 19.2% rise over the past year.
CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 16.03%. In the last reported quarter, it delivered an average earnings surprise of 4.73%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report
Haemonetics Corporation (HAE) : Free Stock Analysis Report
