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