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Let's talk about the popular Edwards Lifesciences Corporation (NYSE:EW). The company's shares saw a decent share price growth in the teens level on the NYSE over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Edwards Lifesciences’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Edwards Lifesciences
What's The Opportunity In Edwards Lifesciences?
According to my valuation model, Edwards Lifesciences seems to be fairly priced at around 2.38% above my intrinsic value, which means if you buy Edwards Lifesciences today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $66.32, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Edwards Lifesciences’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Edwards Lifesciences look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 33% over the next couple of years, the future seems bright for Edwards Lifesciences. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in EW’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on EW, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.