Still Neutral on Edwards - Analyst Blog

By
A A A

On Mar 4, 2013, we reiterated our Neutral recommendation on Edwards Lifesciences ( EW ) following the fourth-quarter 2012 results.

Why Neutral?

On Feb 4, Edwards reported impressive fourth-quarter results after a setback in the third quarter. Its fourth-quarter adjusted earnings per share shot up 45.2% year over year to 90 cents, beating the Zacks Consensus Estimate as well as company expectations.

Revenues improved 18.7% to $510.5 million, surpassing the Zacks Consensus Estimate. For the year, adjusted earnings of $2.69 per share and revenues of $1,899.6 million also edged past the corresponding Zacks Consensus Estimate.   

Like earlier quarters, margin expansion supported earnings upside for the company. Disciplined spending should support better margin, which in turn should leverage Edwards' bottom line.

After a disappointing third quarter, the Transcatheter Heart Valves (THV) group regained its momentum on the back of the launch of Sapien in the U.S. for high-risk patients. With other clinical trials for Sapien progressing in a timely manner, we believe that the expansion of the target population should boost THV sales over the long haul.

We are also encouraged to note Edwards' performance in Japan and emerging markets. Among the emerging markets, China is expected to surface as a major positive catalyst on the heels of anticipated product approvals in conjunction with favorable healthcare and economic trends. However, the Chinese market is also a happy hunting ground for Edwards' competitors.

On the flip side, European macroeconomic woes dragged the performance of the company in the region. While Edwards is battling the contagion of economic problems in Southern Europe, Medtronic 's ( MDT ) strides in its structural heart business in Europe is another cause of concern. Also, foreign exchange headwinds might hamper sales. We remain wary of an uncertain economy, currency headwinds and competitive tussle to stay on the sidelines for Edwards.

With a history of posting positive earnings beat and the agreement among analysts, the stock carries a Zacks Rank #2 (Buy). Other Zacks Rank #2 medical stocks are Myriad Genetics ( MYGN ) and Conceptus ( CPTS ).



CONCEPTUS INC (CPTS): Free Stock Analysis Report

EDWARDS LIFESCI (EW): Free Stock Analysis Report

MEDTRONIC (MDT): Free Stock Analysis Report

MYRIAD GENETICS (MYGN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CPTS , EW , MDT , MYGN

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Pop Quiz: Insurance
Pop Quiz: Insurance                 

Stocks

Referenced

Most Active by Volume

39,968,291
  • $102.671 ▲ 0.53%
36,499,166
  • $16.0713 ▼ 0.79%
25,650,879
  • $12.98 ▼ 5.12%
22,674,328
  • $49.53 ▲ 3.06%
20,543,556
  • $3.615 ▲ 0.70%
14,500,440
  • $19.005 ▼ 1.07%
12,677,272
  • $74.03 ▼ 0.80%
12,409,032
  • $10.95 ▼ 2.23%
As of 8/28/2014, 12:27 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com