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Edwards Lifesciences (EW) Up 19.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Edwards Lifesciences (EW - Free Report) . Shares have added about 19.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Edwards Lifesciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Edwards Lifesciences Q2 Earnings Meet Estimates, Margins Down
Edwards Lifesciences Corporationreported adjusted earnings per share of 70 cents in the second quarter of 2024, in line with the Zacks Consensus Estimate. The figure also increased 6.1% from the year-ago quarter’s level.
The company’s previously announced sale of Critical Care for $4.2 billion remains on track and is expected to close in the late third quarter of 2024. The unit is now presented as discontinued operations.
On this note, GAAP earnings per share from continuing operations was 61 cents in the second quarter compared with 42 cents in the second quarter of 2023. The quarter’s one-time adjustments primarily include certain litigation expenses, amortization of intangible assets and separation costs related to the planned sale of Critical Care, among others.
Sales Details
In the second quarter, sales were $1.39 billion compared with $1.53 billion in the year-ago period. The metric also missed the Zacks Consensus Estimate by 16.2%.
Segmental Details
In the second quarter, global sales in the Transcatheter Aortic Valve Replacement (“TAVR”) product group amounted to $1.04 billion, up 4.7% year over year or 5.8% at CER. This compares with our model’s projection of $1.06 billion for the second quarter of 2024.
The company remains pleased with the performance of its SAPIEN 3 Ultra RESILIA platform, which is the leading platform in the United States and Japan. Edwards is actively pursuing significant opportunities to grow TAVR globally over the long term and remains committed to advancing science for aortic stenosis patients through the PROGRESS and EARLY TAVR trials, which could fundamentally change how AS patients are treated.
Transcatheter Mitral and Tricuspid Therapies (“TMTT”) sales totaled $83 million, up 74.4% from the prior-year quarter’s figure on a reported basis (up 74.7% at CER). This compares with our model’s projection of $87.4 million for the second quarter of 2024.
This performance was driven by the PASCAL system and the early commercial introduction of the EVOQUE system in the United States and Europe.
Surgical Structural Heart sales in the second quarter totaled $264.3 million, up 3.1% from the year-ago quarter’s levels on a reported basis and 4.6% at CER. This compares with our model’s projection of $258.3 million for the second quarter of 2024.
Growth was driven by the strong global adoption of Edwards’ premium surgical technologies, INSPIRIS, MITRIS and KONECT. The company continues to see positive procedure growth globally for the many patients best treated surgically, including those undergoing complex procedures.
Critical Care sales totaled $246.4 million in the second quarter, up 5% from the year-ago quarter’s levels on a reported basis and 6.7% on CER. This compares with our model’s projection of $241.6 million for the second quarter of 2024. Growth was led by pressure monitoring devices used in the ICU, with strong contributions from smart recovery technologies, including the Acumen IQ sensor. Demand was also strong for Swan-Ganz catheters.
Margins
In the second quarter, the gross profit was $1.10 billion, up 6%. However, the gross margin contracted 76 basis points (bps) to 79.4%. The company-provided adjusted gross margin was 77.1% compared with 77.7% in the same period last year. This reduction was due to the unfavorable impact of foreign exchange.
SG&A expenses rose 9.8% year over year to $450.8 million. R&D expenditures were $272.6 million, up 11.9% year over year. During the reported quarter, the operating income fell 1.9% year over year to $377.2 million. The operating margin contracted 246 bps to 27.2%.
Cash Position
Edwards Lifesciences exited the second quarter of 2024 with cash and cash equivalents and short-term investments of $1.99 billion compared with $1.69 billion recorded at the end of the first quarter of 2024.
The long-term debt was $597.3 million at the end of the second quarter, slightly up from $597.2 million at the end of the first quarter.
Guidance
Edwards Lifesciences projects the full-year 2024 sales growth to be 8% to 10% (previous outlook suggested sales of $6.3 billion-$6.6 billion, growth to be at the high end of the prior guidance of 8). The Zacks Consensus Estimate for the metric is pegged at $6.56 billion.
For the third quarter, the company projects EPS in the range of 67-71 cents. The Zacks Consensus Estimate for the metric is pegged at 69 cents. The company expects third-quarter sales between $1.56 and $1.64 billion, assuming Critical Care is included for the entire third quarter. The Zacks Consensus Estimate for the metric is pegged at $1.62 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Edwards Lifesciences has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Edwards Lifesciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Edwards Lifesciences belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Intuitive Surgical, Inc. (ISRG - Free Report) , has gained 12.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Intuitive Surgical reported revenues of $2.01 billion in the last reported quarter, representing a year-over-year change of +14.5%. EPS of $1.78 for the same period compares with $1.42 a year ago.
For the current quarter, Intuitive Surgical is expected to post earnings of $1.65 per share, indicating a change of +13% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Intuitive Surgical has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Edwards Lifesciences (EW) Up 19.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Edwards Lifesciences (EW - Free Report) . Shares have added about 19.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Edwards Lifesciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Edwards Lifesciences Q2 Earnings Meet Estimates, Margins Down
Edwards Lifesciences Corporation reported adjusted earnings per share of 70 cents in the second quarter of 2024, in line with the Zacks Consensus Estimate. The figure also increased 6.1% from the year-ago quarter’s level.
The company’s previously announced sale of Critical Care for $4.2 billion remains on track and is expected to close in the late third quarter of 2024. The unit is now presented as discontinued operations.
On this note, GAAP earnings per share from continuing operations was 61 cents in the second quarter compared with 42 cents in the second quarter of 2023. The quarter’s one-time adjustments primarily include certain litigation expenses, amortization of intangible assets and separation costs related to the planned sale of Critical Care, among others.
Sales Details
In the second quarter, sales were $1.39 billion compared with $1.53 billion in the year-ago period. The metric also missed the Zacks Consensus Estimate by 16.2%.
Segmental Details
In the second quarter, global sales in the Transcatheter Aortic Valve Replacement (“TAVR”) product group amounted to $1.04 billion, up 4.7% year over year or 5.8% at CER. This compares with our model’s projection of $1.06 billion for the second quarter of 2024.
The company remains pleased with the performance of its SAPIEN 3 Ultra RESILIA platform, which is the leading platform in the United States and Japan. Edwards is actively pursuing significant opportunities to grow TAVR globally over the long term and remains committed to advancing science for aortic stenosis patients through the PROGRESS and EARLY TAVR trials, which could fundamentally change how AS patients are treated.
Transcatheter Mitral and Tricuspid Therapies (“TMTT”) sales totaled $83 million, up 74.4% from the prior-year quarter’s figure on a reported basis (up 74.7% at CER). This compares with our model’s projection of $87.4 million for the second quarter of 2024.
This performance was driven by the PASCAL system and the early commercial introduction of the EVOQUE system in the United States and Europe.
Surgical Structural Heart sales in the second quarter totaled $264.3 million, up 3.1% from the year-ago quarter’s levels on a reported basis and 4.6% at CER. This compares with our model’s projection of $258.3 million for the second quarter of 2024.
Growth was driven by the strong global adoption of Edwards’ premium surgical technologies, INSPIRIS, MITRIS and KONECT. The company continues to see positive procedure growth globally for the many patients best treated surgically, including those undergoing complex procedures.
Critical Care sales totaled $246.4 million in the second quarter, up 5% from the year-ago quarter’s levels on a reported basis and 6.7% on CER. This compares with our model’s projection of $241.6 million for the second quarter of 2024. Growth was led by pressure monitoring devices used in the ICU, with strong contributions from smart recovery technologies, including the Acumen IQ sensor. Demand was also strong for Swan-Ganz catheters.
Margins
In the second quarter, the gross profit was $1.10 billion, up 6%. However, the gross margin contracted 76 basis points (bps) to 79.4%. The company-provided adjusted gross margin was 77.1% compared with 77.7% in the same period last year. This reduction was due to the unfavorable impact of foreign exchange.
SG&A expenses rose 9.8% year over year to $450.8 million. R&D expenditures were $272.6 million, up 11.9% year over year. During the reported quarter, the operating income fell 1.9% year over year to $377.2 million. The operating margin contracted 246 bps to 27.2%.
Cash Position
Edwards Lifesciences exited the second quarter of 2024 with cash and cash equivalents and short-term investments of $1.99 billion compared with $1.69 billion recorded at the end of the first quarter of 2024.
The long-term debt was $597.3 million at the end of the second quarter, slightly up from $597.2 million at the end of the first quarter.
Guidance
Edwards Lifesciences projects the full-year 2024 sales growth to be 8% to 10% (previous outlook suggested sales of $6.3 billion-$6.6 billion, growth to be at the high end of the prior guidance of 8). The Zacks Consensus Estimate for the metric is pegged at $6.56 billion.
For the third quarter, the company projects EPS in the range of 67-71 cents. The Zacks Consensus Estimate for the metric is pegged at 69 cents. The company expects third-quarter sales between $1.56 and $1.64 billion, assuming Critical Care is included for the entire third quarter. The Zacks Consensus Estimate for the metric is pegged at $1.62 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Edwards Lifesciences has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Edwards Lifesciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Edwards Lifesciences belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Intuitive Surgical, Inc. (ISRG - Free Report) , has gained 12.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Intuitive Surgical reported revenues of $2.01 billion in the last reported quarter, representing a year-over-year change of +14.5%. EPS of $1.78 for the same period compares with $1.42 a year ago.
For the current quarter, Intuitive Surgical is expected to post earnings of $1.65 per share, indicating a change of +13% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Intuitive Surgical has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.