Edwards Lifesciences’ EW fourth-quarter performance was backed by its most comprehensive structural heart disease portfolio. The Surgical Structural Heart business is benefiting from the strong adoption of premium surgical technologies worldwide. In the TAVR (Transcatheter Aortic Valve Replacement) segment, the increasing global uptake of SAPIEN portfolio is highly encouraging. Meanwhile, a volatile macro economy and adverse currency impacts may dent Edwards’ growth.
In the past year, this Zacks Rank #3 (Hold) company’s shares have lost 13.8% against 4.8% growth of the industry and a 24.1% increase of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $44.63 billion. EW’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 2.60%.
Let’s delve deeper.
Upsides for EW
Surgical Structural Heart, a Promising Business: The business pioneered the innovative RESILIA tissue technology. The favorable data from the COMMENCE aortic and mitral trials, studying the safety and effectiveness of bioprosthetic valves made with RESILIA tissue, continues to support the strong momentum of the portfolio globally.
In the fourth quarter of 2024, the segment grew 5% from the prior-year level, driven by strong global adoption of Edwards’ premium surgical technologies, INSPIRIS, MITRIS and KONECT. The company continues to see positive procedure growth globally for the many patients treated surgically, including those undergoing complex procedures.
Edwards has been continuously generating evidence to expand the RESILIA portfolio. In line with this, during the fourth quarter, the company shared multi-center real-world KONECT study data for the past year at the STS conference.
As another major development, Edwards Lifesciences closed the acquisition of Endotronix in 2024, marking its entry into implantable heart failure management (IHFM).
TAVR Holds Potential: The company’s TAVR platform is positioned for continued global leadership and strong, sustainable growth. The business closed the fourth quarter of 2024 with 5.3% year-over-year growth. The company remains committed to advancing evidence for AS patients. In the United States, the year-over-year TAVR sales growth rate was in line with the global TAVR constant currency growth rate.
Outside the United States, TAVR sales growth was supported by the continued launch of SAPIEN 3 Ultra RESILIA in Europe. Management anticipates TAVR growth momentum to continue as centers gradually adopt these new therapies and become part of extended processes. In Japan, EW continues to focus on expanding the ability of this therapy, with AS being a significant undertreated disease among the substantial elderly population.
Concerns for Edwards
Macro Concerns Weigh on the Bottom Line: The global economy continues to experience volatility and disruptions, including inflation and factors influencing overall economic stability and the political environment relating to health care. Additionally, any significant increase in the cost of raw materials and supply constraints stemming from geopolitical complications, regulatory changes or otherwise could weigh heavily on the company’s operating results.
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Post-pandemic, the business has been experiencing staffing shortages within the hospital systems and a surge in medical supply expenses, laying significant pressure on the margins of medical device companies like Edwards.
Foreign Exchange Headwinds: Foreign exchange is a major headwind for Edwards because a considerable percentage of its revenues comes from outside the United States. The unfavorable currency fluctuations have adversely impacted EW’s gross margin over the past few quarters. Foreign exchange rates decreased fourth-quarter gross profit margin by 30 basis points compared to the prior year.
EW’s Estimate Trend
The Zacks Consensus Estimate for 2025 earnings per share (EPS) has remained constant at $2.45 in the past 30 days.
The Zacks Consensus Estimate for 2024 revenues is pegged at $5.81 billion, implying a 2.6% decline from the year-ago reported number.
Top MedTech Picks
Some better-ranked stocks in the broader medical space are Phibro Animal Health PAHC, Veracyte VCYT and Quest Diagnostics DGX.
Phibro Animal Health has an estimated fiscal 2025 earnings growth rate of 43.7% compared with the industry’s 14.4%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.06%. Its shares have surged 115% compared with the industry’s 15.5% growth in the past year.
PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Veracyte, carrying a Zacks Rank #2 (Buy) at present, has an estimated 2024 earnings growth rate of 138.2% compared with the industry’s 15.4%. Shares of the company have surged 54.4% compared with the industry’s 7.3% growth over the past year. VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 520.58%.
Quest Diagnostics, carrying a Zacks Rank #2 at present, has an earnings yield of 5.87% compared with the industry’s 4.02%. Shares of the company have rallied 28.4% compared with the industry’s 14.8% growth. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.75%.
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