On Friday, Truist Securities made an adjustment to the price target for Edwards Lifesciences (NYSE:EW), a prominent player in the medical device sector. The firm reduced the target to $70.00 from the previous $71.00 while maintaining a Hold rating on the stock. The revision comes amid a period marked by discontinued operations that contributed to a complicated third quarter for the company.
The analyst from Truist Securities noted that despite the cluttered third-quarter results, Edwards Lifesciences' Transcatheter Aortic Valve Replacement (TAVR) and Transcatheter Mitral and Tricuspid Therapies (TMTT) segments showed a slight upside. However, there remains uncertainty about the growth reacceleration prospects for TAVR.
The analyst pointed out that while potential positive outcomes from upcoming Transcatheter Cardiovascular Therapeutics (TCT) read-outs could drive momentum for TAVR and the EVOQUE product into 2025, the prospects for a multiple re-expansion for Edwards Lifesciences could be limited in the intermediate term.
The limitation is partly due to expectations of a decrease in earnings per share (EPS) in 2025. The firm has slightly lowered its EPS estimate to $2.45 from the previous estimate of $2.52. This adjustment reflects the impact of the critical care sale and the dilution from acquisitions. According to the analyst, the risk/reward at current stock levels is balanced, and the stock might experience a period of marking time until there is greater confidence in revenue and EPS acceleration.
The report concludes with the analyst's perspective that Edwards Lifesciences' stock price may remain steady in the near term, as investors and the market look for clearer indicators of the company's financial trajectory, particularly in regards to its revenue and earnings growth. The new price target reflects a modest adjustment based on the latest evaluations of the company's performance and market conditions.
In other recent news, Edwards Lifesciences recently reported third-quarter earnings that exceeded analyst expectations. The company posted adjusted earnings per share of $0.67, surpassing the consensus estimate of $0.66, and generated revenue of $1.35 billion, marking an 8.9% increase year over year. The strong performance was primarily driven by a significant 73% surge in its Transcatheter Mitral and Tricuspid Therapies (TMTT) business, which reached $91 million in sales. This growth reflects the robust adoption of its PASCAL repair system and the ongoing rollout of the EVOQUE tricuspid replacement system.
Edwards Lifesciences also saw a 6% growth in its core Transcatheter Aortic Valve Replacement (TAVR) business, reaching $1.02 billion in sales. The company anticipates revenue for the upcoming fourth quarter to be between $1.33 billion and $1.39 billion, with adjusted EPS expected to range from $0.53 to $0.57.
Despite these projections being below current analyst expectations, Edwards Lifesciences has reiterated its full-year 2024 sales guidance ranges. The company recently completed the sale of its Critical Care business, further focusing its efforts on structural heart therapies. These are some of the recent developments at Edwards Lifesciences.
InvestingPro Insights
To complement Truist Securities' analysis, recent data from InvestingPro provides additional context for Edwards Lifesciences' financial position. The company's market capitalization stands at $42.38 billion, with a P/E ratio of 28.87, indicating a relatively high valuation compared to earnings. This aligns with an InvestingPro Tip suggesting that EW is "Trading at a high P/E ratio relative to near-term earnings growth."
Despite the challenges noted in the article, Edwards Lifesciences has demonstrated strong financial performance in some areas. The company's revenue for the last twelve months as of Q2 2024 was $6.2 billion, with a robust revenue growth of 19.3% over the same period. Additionally, the gross profit margin stands at an impressive 76.38%, reflecting the company's efficiency in manufacturing and pricing power.
Another InvestingPro Tip highlights that EW "Operates with a moderate level of debt," which could provide financial flexibility as the company navigates the uncertainties mentioned in the Truist Securities report. This financial stability is further supported by the fact that "Cash flows can sufficiently cover interest payments."
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Edwards Lifesciences, providing a deeper understanding of the company's financial health and market position.
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