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Edwards Lifesciences stock target lifted, maintains hold on guidance

EditorNatashya Angelica
Published 05/12/2024, 15:04
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On Thursday, Truist Securities updated its stance on shares of Edwards Lifesciences (NYSE:EW), increasing the price target to $78 from $70, while keeping a Hold rating on the stock.

The adjustment follows the company's Investor Day, which provided insights into its financial guidance for the coming years and highlighted strategies for revenue and earnings growth. According to InvestingPro data, the stock currently trades at a P/E ratio of 10.8x, suggesting attractive valuation levels relative to its growth potential.

The Truist Securities analyst pointed out that the Investor Day acted as a clarifying event, with 2025 earnings per share (EPS) guidance aligning with consensus estimates. Management's focus during the event was on charting a course towards double-digit revenue and EPS growth starting in 2026.

This outlook is in line with the firm's and consensus modeling. The company's strong financial foundation is evident in its impressive 76.6% gross profit margin and "GREAT" financial health score from InvestingPro.

Edward Lifesciences' guidance for Transcatheter Aortic Valve Replacement (TAVR) growth was set at 5-7%, which met expectations. However, the company's TAVR trends have seen a slowdown since July, affected by dilution from the Critical Care (CC) divestiture and various deals.

Despite these headwinds, the analyst noted that the Transcatheter Mitral and Tricuspid Therapies (TMTT) segment projections for 2025 and the long term were above consensus, driven by the momentum of the Evoque product and the upcoming mitral replacement (M3) system.

The price target increase to $78 reflects a forward-looking valuation, specifically a 28 times price-to-earnings (P/E) multiple on the estimated 2026 EPS. The analyst mentioned that to argue for a higher premium on the stock, which is expected to grow revenue and EPS by over 10% ('double-digit'), there would need to be more confidence in the established upside and a more robust trajectory for revenue acceleration.

The reiterated Hold rating indicates that while the analyst acknowledges the positive aspects of Edwards Lifesciences' long-term growth plans, they remain cautious about the company's near-term earnings potential and revenue growth pace.

InvestingPro analysis reveals additional insights through its comprehensive Pro Research Report, which includes 8 more key ProTips and detailed financial metrics that could help investors make more informed decisions about EW's growth trajectory.

In other recent news, Edwards Lifesciences has been experiencing significant developments. The company's annual investor conference revealed a promising financial outlook for 2025, with projected revenues ranging from $5.6 billion to $6.0 billion.

This forecast aligns closely with estimates from Oppenheimer and a consensus estimate of $5.91 billion. In addition, the company's third-quarter sales saw a 10% increase, reaching $1.35 billion.

Edwards Lifesciences' growth is anticipated to be driven by the EARLY-TAVR trial, projected to boost the growth of Transcatheter Aortic Valve Replacement procedures. Moreover, the company's Transcatheter Mitral and Tricuspid Therapies portfolio is expected to generate sales of approximately $2 billion by 2030.

Analyst ratings have been varied, with Oppenheimer maintaining an Outperform rating and a $90.00 price target, while Goldman Sachs (NYSE:GS) kept a Buy rating with a price target of $80. However, Canaccord Genuity maintained a Hold rating on Edwards Lifesciences and increased the price target to $68. On the other hand, Piper Sandler and BofA Securities reaffirmed their Neutral ratings.

Edwards Lifesciences has also been the focus of several key developments. The company's EVOQUE transcatheter tricuspid valve replacement system showed promising results in the TRISCEND II trial, and the company was recently removed from Citi's 90-Day Upside Catalyst Watch List. These developments reflect the company's strong financial performance and potential for future growth.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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