Edwards Lifesciences Corporation EW is set to thrive in the upcoming quarters, driven by the buoyant prospects of the Critical Care business, one of its rapidly growing business segments. The RESILIA portfolio is gaining significant traction, with widespread adoption. The company’s Transcatheter Mitral and Tricuspid Therapies (TMTT) division’s new therapy introductions, clinical trial accomplishments, and geographic expansion augur well for the company’s future.
Conversely, escalating expenses and foreign exchange headwinds pose ongoing challenges for EW’s operations.
In the last year, the Zacks Rank #3 (Hold) stock has witnessed a 1.8% decline, trailing the 1.6% increase in the industry and the 24.5% surge of the S&P 500 composite. Edward Lifesciences boasts a market capitalization of $46.3 billion. Over the past four quarters, the company has exceeded earnings estimates in three and met them once, resulting in an average surprise of 2.03%.
Let’s dig deeper into the reasons to maintain faith in EW stock.
The Bright Side
Potential of Critical Care Business: Edwards’ comprehensive hemodynamic portfolio within Critical Care includes innovative monitoring platforms and a software suite with advanced algorithms for advanced hemodynamic management. The company is focusing on smart recovery technologies to facilitate better decision-making for clinicians.
Furthermore, the company is driving the adoption of its Smart Recovery Technologies and the Acumen IQ sensor. With a robust pipeline of critical care innovations, Edwards is redirecting its attention to smart recovery technologies, designed to facilitate improved clinical decision-making and expedite patient recovery.
Promising Prospects in TAVR: Edwards Lifesciences continues to experience sales growth propelled by its leading SAPIEN platform. The company’s TAVR sales continue to be driven by the strong performance of various valves across different regions of the world.
The company aims to enhance the diagnosis and treatment of more patients who currently lack adequate treatment. Edwards expects to achieve $180-$200 million in sales from its TMTT products for the full year, highlighting the robust growth potential in this segment.
Macroeconomic Pressures: Edwards Lifesciences faces escalating expenses, especially in SG&A and R&D, driven by performance-based compensation and ongoing investments in transcatheter valve innovations.
Foreign Exchange Woes: The company grapples with significant foreign exchange headwinds, impacting its gross margin over the past few quarters. In the third quarter of 2023, foreign exchange rates decreased reported sales growth and led to a lower adjusted gross profit margin of 76.3%.
The Zacks Consensus Estimate for Edwards Lifesciences’ 2023 earnings per share (EPS) has remained stable at $2.51 in the past 30 days. The company’s 2023 revenues are forecasted to reach $5.97 billion, reflecting a 10.9% year-over-year increase.
Some promising stocks in the broader medical space include Haemonetics (HAE), DaVita (DVA), and HealthEquity (HQY). Haemonetics, in particular, shows impressive earnings growth potential, with its shares outperforming the industry.
HAE, currently holding a Zacks Rank #2 (Buy), has witnessed a 10.7% increase in its shares over the past year, overshadowing the industry’s growth. These stocks present fruitful investment opportunities worth considering.