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What Makes Edwards Lifesciences (EW) a Buy? - Analyst Blog

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Zacks Investment Research upgraded Edwards Lifesciences Corp. ( EW ) to a Zacks Rank #2 (Buy) on Aug 4, 2014.

Why the Upgrade?

Shares of this medical device major have rallied upward since it reported financial results for the second quarter of 2014 and subsequently hit a new 52-week high of $95.51 on Aug 7.

The company delivered strong second-quarter 2014 results with both top and bottom-line beats over the Zacks Consensus Estimate.

Adjusted earnings per share (EPS) came in at 88 cents beating the Zacks Consensus Estimate by 11 cents or a robust 14.3%. Earnings also exceeded the year-ago number of 84 cents by 4.8%. The earnings improvement came on the back of stronger-than-expected sales growth across all of the company's product lines.

Sales grossed $575.1 million, up 11.2% year over year (excluding the impact of foreign exchange fluctuations and the transcatheter heart valves sales return reserve, underlying growth was 10.5%), outpacing the Zacks Consensus Estimate of $546 million.

Throughout the second quarter, the company remained in the headlines owing to positive results for the SAPIEN 3 transcatheter valve; the launch of SAPIEN XT in the U.S.; and more recently, for receiving the FDA approval for its ClearSight noninvasive monitoring system. Management expects to gain substantially in its critical care product line aided by increased sales of Edwards' best-in-class monitoring technology, including the newest ClearSight system.

In May 2014, Edwards Lifesciences had agreed to settle all outstanding patent litigation with Medtronic Inc. ( MDT ), including cases related to Transcatheter Heart Valve (THV). As part of this settlement, Medtronic has made a one-time payment of $750 million to Edwards. In addition, Medtronic will also pay Edwards quarterly license royalty payments through April 2022. We believe this settlement is in the best interests of Edwards Lifesciences and will allow the company to continue its leadership position in the U.S. transcatheter aortic heart valve market.

Other Stocks to Consider

Edwards Lifesciences currently has $10.07 billion worth of market capitalization. Other stocks that are worth a look in the healthcare industry are Abaxis, Inc. ( ABAX ) and Hologic Inc. ( HOLX ). Both the companies carry a similar Zacks Rank #2.

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EDWARDS LIFESCI (EW): Free Stock Analysis Report

MEDTRONIC (MDT): Free Stock Analysis Report

HOLOGIC INC (HOLX): Free Stock Analysis Report

ABAXIS INC (ABAX): Free Stock Analysis Report

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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.


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

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