Will Edwards' (EW) Steady Overall Growth Drive Q3 Earnings?

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Edwards Lifesciences CorporationEW is slated to report third-quarter 2018 results, after market close on Oct 23. Last quarter, the company's earnings beat the Zacks Consensus Estimate by 9.7%. Moreover, Edwards Lifesciences delivered positive earnings surprises in three of the trailing four quarters, the average beat being 5.7%. Let's see how things are shaping up prior to this announcement.

Key Catalyst

Similar to the prior quarter, Edwards Lifesciences is expected to gain from strength in Transcatheter Heart Valve Therapy (THVT) segment. Banking on continued therapy adoption across all geographies, with notable strength in the United States, the company is expected to continue seeing strength in the THVT segment in the third quarter of 2018.

In the United States, the company received FDA approval for aortic and mitral valve-in-valve procedures, using SAPIEN 3 transcatheter heart valve, which is expected to reflect in the to-be-reported quarter's top line as well.

Outside the United States, underlying growth rate continues to remain solid. The company has been fortifying its THVT business in Europe as well, with double-digit procedure growth in the last reported quarter. Further, the company announced CE Mark for its self-expanding CENTERA valve in February.

Edwards Lifesciences Corporation Price and EPS Surprise

Edwards Lifesciences Corporation Price and EPS Surprise | Edwards Lifesciences Corporation Quote

Edwards Lifesciences is also likely to continue to gain from strong therapy implementation across all regions.

The company also saw continued TAVR therapy adoption in Japan driven by solid uptake of SAPIEN 3. Moreover, some new centers have been added Japan, which in turn is expected to have driven sales in the to-be-reported quarter.

The strong performance in the preceding quarter has encouraged Edwards Lifesciences to maintain full-year transcatheter heart valves (THV) sales growth rate expectations at the high end of the 11% to 15% range. According to management, THV is the company's highest margin business.

Accordingly, the Zacks Consensus Estimate for THV sales of $560 million shows an increase of 16.4% from the year-ago quarter.

Overall, third-quarter total revenues are projected at $925 million, showing rise of 12.6% from the prior-year quarter.

Here are a few other factors that might influence Edwards Lifesciences' third-quarter results:

Edwards Lifesciences is expected to see consistent performance from segments - Surgical Heart Valve Therapy and Critical Care.

The Surgical Heart Valve Therapy product group delivered a strong performance last quarter on encouraging response for new products and strong uptake of aortic valves across all geographies. In fact, the company's latest aortic valve products drove underlying sales growth at a rate which surpassed the total procedure growth rate in the last reported quarter.

Moreover, buoyed by continued adoption of INTUITY Elite valve system, management expects INTUITY Elite valve system to continue to drive the top line in the third quarter.

This apart, INSPIRIS RESILIA aortic valve is witnessing encouraging demand in the United States since its rollout began last January.

TheZacks Consensus Estimate for Surgical Heart Valve Therapy product sales of $202 million reflects a rise of 3.1% from the year-ago quarter.

We are also upbeat about Critical Care product group seeing solid growth across all product categories on strong performance by the company's core products.

Edwards Lifesciences is also positioned to keep gaining from Critical Care technologies with the rollout of HemoSphere monitoring platform supported by new group purchasing organization contracts in the United States.

Theconsensus estimate for Critical Care product group sales of $153 million shows an increase of 5.5% from the year-ago quarter.

For the third quarter of 2018, the company projects sales between $900 million and $950 million and adjusted EPS between 93 cents and $1.03.

What Our Model Suggests

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP . You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Edwards Lifesciences has a Zacks Rank #2 and an Earnings ESP of +0.67%, a combination that suggests that the company is likely to beat estimates.

The Zacks Consensus Estimate for earnings of $1.02 reflects a 21.4% rise on a year-over-year basis.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering as these also have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Baxter International Inc BAX has an Earnings ESP of +0.90% and a Zacks Rank #2. You can see  the complete list of today's Zacks #1 Rank stocks here .

Thermo Fisher Scientific Inc. TMO carries a Zacks Rank #3 and has an Earnings ESP of +0.48%. 

Myriad Genetics, Inc. MYGN has an Earnings ESP of +1.42% and a Zacks Rank #3.

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

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: TMO , BAX , EW , MYGN

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