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Here's Why You Should Retain Edwards Lifesciences (EW) Stock
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Edwards Lifesciences (EW - Free Report) is well poised for growth in the coming months, backed by robust third-quarter results and bullish 2021 guidance. However, downsides may result from foreign exchange fluctuations and stiff competition.
Over the past year, shares of this Zacks Rank #3 (Hold) company have gained 39.7% compared with 12.5% growth of the industry and 30.9% rise of the S&P 500.
The company, aimed at treating advanced cardiovascular diseases, especially structural heart disease, has a market capitalization of $71.37 billion. The company projects 15.7% growth for the next five years. The company surpassed estimates in the trailing three quarters and missed the same in one, the average surprise being 6.87%.
Riding on current business growth and bullish near-term prospects, the company is worth holding on to for now.
Key Growth Catalysts
Impressive Q3 Results: Edwards Lifesciences exited the third quarter of 2021 with better-than-expected earnings despite the pronounced impact of the Delta variant. Strong sales growth across all four product groups buoys optimism. The strong adoption of the INSPIRIS aortic surgical valve and the KONECT aortic valve conduit looks encouraging. Continued strong adoption of the SAPIEN 3 Ultra platform and the PASCAL system across Europe looks encouraging. The company has reinstated its full-year 2021 outlook, which is indicative of the continuation of this bullish trend.
Critical Care Business Holds Potential Amid Pandemic: The segment registered growth compared to the year-ago quarter, resulting from balanced contributions from all product lines, led by HemoSphere sales in the United States as hospital capital spending continues to rise. Further, True Wave disposable pressure monitoring devices used in the ICU witnessed high demand due to the elevated hospitalizations and demand for products used in high-risk surgery. Additionally, the company witnessed high demand for the ClearSight non-invasive finger cup used in elective procedures during the quarter.
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Upbeat Guidance: For the fourth quarter of 2021, Edwards Lifesciences expects adjusted earnings per share (EPS) in the range of 53-59 cents. The company projects fourth-quarter 2021 sales revenues in the range of $1.30-$1.38 billion.
For 2021, the company reinstated its previous projection for adjusted EPS at the high end of the $2.07-$2.27 range. The company also reinstated its previous anticipation for sales at $5.2-$5.4 billion for the year.
Downsides
On the flip side, some factors have been deterring the stock’s rally of late.
Foreign Exchange Headwinds: Unfavorable foreign currency has affected Edward Lifesciences’ gross margin over the past few quarters.
Competitive Landscape: The medical devices industry is highly competitive with several competent players. In Heart Valve Therapy, Edwards Lifesciences primarily competes with Medtronic and Sorin Group, whereas players such as ICU Medical, Pulsion Medical Systems AG and Becton, Dickinson pose a threat for the other segments.
Estimate Trends
For the current year, Edwards Lifesciences is witnessing a neutral estimate trend. In the past 90 days, the Zacks Consensus Estimate for earnings has been constant at $2.26.
The Zacks Consensus Estimate for 2021 revenues is pegged at $5.25 billion, suggesting 19.8% growth from the year-ago reported number.
Thermo Fisher Scientific reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO surpassed estimates in the trailing four quarters, the average surprise being 9.02%.
LabCorp reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%.
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Here's Why You Should Retain Edwards Lifesciences (EW) Stock
Edwards Lifesciences (EW - Free Report) is well poised for growth in the coming months, backed by robust third-quarter results and bullish 2021 guidance. However, downsides may result from foreign exchange fluctuations and stiff competition.
Over the past year, shares of this Zacks Rank #3 (Hold) company have gained 39.7% compared with 12.5% growth of the industry and 30.9% rise of the S&P 500.
The company, aimed at treating advanced cardiovascular diseases, especially structural heart disease, has a market capitalization of $71.37 billion. The company projects 15.7% growth for the next five years. The company surpassed estimates in the trailing three quarters and missed the same in one, the average surprise being 6.87%.
Riding on current business growth and bullish near-term prospects, the company is worth holding on to for now.
Key Growth Catalysts
Impressive Q3 Results: Edwards Lifesciences exited the third quarter of 2021 with better-than-expected earnings despite the pronounced impact of the Delta variant. Strong sales growth across all four product groups buoys optimism. The strong adoption of the INSPIRIS aortic surgical valve and the KONECT aortic valve conduit looks encouraging. Continued strong adoption of the SAPIEN 3 Ultra platform and the PASCAL system across Europe looks encouraging. The company has reinstated its full-year 2021 outlook, which is indicative of the continuation of this bullish trend.
Critical Care Business Holds Potential Amid Pandemic: The segment registered growth compared to the year-ago quarter, resulting from balanced contributions from all product lines, led by HemoSphere sales in the United States as hospital capital spending continues to rise. Further, True Wave disposable pressure monitoring devices used in the ICU witnessed high demand due to the elevated hospitalizations and demand for products used in high-risk surgery. Additionally, the company witnessed high demand for the ClearSight non-invasive finger cup used in elective procedures during the quarter.
Upbeat Guidance: For the fourth quarter of 2021, Edwards Lifesciences expects adjusted earnings per share (EPS) in the range of 53-59 cents. The company projects fourth-quarter 2021 sales revenues in the range of $1.30-$1.38 billion.
For 2021, the company reinstated its previous projection for adjusted EPS at the high end of the $2.07-$2.27 range. The company also reinstated its previous anticipation for sales at $5.2-$5.4 billion for the year.
Downsides
On the flip side, some factors have been deterring the stock’s rally of late.
Foreign Exchange Headwinds: Unfavorable foreign currency has affected Edward Lifesciences’ gross margin over the past few quarters.
Competitive Landscape: The medical devices industry is highly competitive with several competent players. In Heart Valve Therapy, Edwards Lifesciences primarily competes with Medtronic and Sorin Group, whereas players such as ICU Medical, Pulsion Medical Systems AG and Becton, Dickinson pose a threat for the other segments.
Estimate Trends
For the current year, Edwards Lifesciences is witnessing a neutral estimate trend. In the past 90 days, the Zacks Consensus Estimate for earnings has been constant at $2.26.
The Zacks Consensus Estimate for 2021 revenues is pegged at $5.25 billion, suggesting 19.8% growth from the year-ago reported number.
Key Picks
A few better-ranked stocks from the broader medical space are Thermo Fisher Scientific Inc. (TMO - Free Report) , Laboratory Corporation of America Holdings, or LabCorp (LH - Free Report) and Medpace Holdings, Inc. (MEDP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher Scientific reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO surpassed estimates in the trailing four quarters, the average surprise being 9.02%.
LabCorp reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%.