On Dec 28, Zacks Investment Research upgraded medical device
Edwards Lifesciences Corp.
) to a Zacks Rank #3 (Hold). While we are still worried about the
expected U.S. launch of a competitor's product in the coming
year, the improving market trend is building confidence.
Why the Upgrade?
The competitive landscape is turning increasingly fierce for
Edwards these days.
Following the U.S. Food and Drug Administration's (FDA) approval
) Extreme Risk and High Risk studies on CoreValve, we are
currently concerned about the launch of this highly competitive
product in the U.S. market, scheduled for the second quarter of
2014. We believe this might reduce Edwards' revenue growth rate
significantly by altering its position in the U.S market.
However, we are upbeat about several positive takeaways by the
company in the recent times. After a disappointing start to 2013,
Edwards reported improved third-quarter results. Earnings per
share and revenues increased 17.2% and 11% year over year,
respectively, to 68 cents and $495.6 million. The top and the
bottom line also exceeded the Zacks Consensus Estimate of 66
cents and $488 million, respectively.
THV and surgical heart valve sales in the quarter were also
encouraging, as was a healthy margin expansion. Reimbursement
approval forSAPIEN XT in Japan remains another material upside.
We believe that emerging markets represent meaningful sales
opportunity. Edwards' pipeline also looks promising as launch of
lucrative products should accelerate growth over the long
Meanwhile, notwithstanding the macroeconomic climate, Europe
presents a large and growing market for valves. Further, market
opportunity is likely to grow significantly on the back of
demographic trends and increasing awareness. Unlike the past
several quarters, EW recorded healthy performance in Europe,
especially for the THV franchise.
Stocks That Warrant a Look
While we remain on the sidelines regarding Edwards at present,
one can consider better-ranked healthcare stocks like
InSite Vision Inc.
), both carrying a Zacks Rank #1 (Strong Buy).
EDWARDS LIFESCI (EW): Free Stock Analysis
HESKA CORP (HSKA): Free Stock Analysis Report
INSITE VISION (INSV): Get Free Report
MEDTRONIC (MDT): Free Stock Analysis Report
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