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Edwards Lifesciences' Critical Care Arm Solid, THVT View Dull

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On Nov 26, we issued an updated research report on Edwards Lifesciences Corporation (EW - Free Report) . The company has registered strong Critical Care sales, banking on which it has raised guidance for the business. However, management expects underlying sales in Transcatheter Heart Valve Therapy (THVT) for 2018 to remain sluggish. The stock currently has a Zacks Rank #3 (Hold).

Shares of this manufacturer of tissue heart valves and repair products used to replace or repair a patient's diseased or defective heart valve have outperformed its industry over the past year. The stock has gained 38.9% compared with the industry’s 10% rally.

The year 2018 is turning out to be a particularly strong year for Critical Care, courtesy of growing demand for HemoSphere. Notably, HemSphere is the next generation all-in-one monitoring platform that is replacing the company’s older monitoring systems.

In the third quarter, Edwards Lifesciences registered double-digit growth on an underlying basis. Sales in the United States were particularly robust this quarter, aided by new group purchasing organization contracts. This apart, in the fourth quarter, the company is planning to introduce its Acumen Hypotension Predictive Index (HPI) to a limited number of hospitals utilizing Edwards Lifesciences’ current platform.

We are also upbeat about the company’s receipt of CE Mark for the SAPIEN 3 Ultra system for transcatheter aortic valve replacement in patients with severe and symptomatic aortic stenosis. The company plans a controlled launch, including training of the SAPIEN 3 Ultra system in Europe in order to ensure high procedural success.

Meanwhile, during the third-quarter earnings announcement, Edwards Lifesciences noted that it expects 2018 underlying sales growth in THVT to remain at around 12.5%, thanks to limited contribution from Cardioband Tricuspid Annular Reduction System and a newly-revised controlled rollout strategy for SAPIEN 3 Ultra.

Meanwhile, tough competition in the cardiac devices market and reimbursement issues continues to raise concern.

Key Picks

A few better-ranked stocks in the broader medical space are Integer Holdings Corporation (ITGR - Free Report) , Surmodics, Inc. (SRDX - Free Report) and Veeva Systems (VEEV - Free Report) .

Integer Holdings has an earnings growth rate of 31.2% for the next quarter and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank of 2 currently.

Veeva Systems’ long-term earnings growth rate is estimated at 19.3%. The stock carries a Zacks Rank #2 at present.

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