On Thursday, Canaccord Genuity adjusted its outlook on Edwards Lifesciences (NYSE:EW), a prominent medical technology company. The firm reduced the price target to $77 from the previous $85 while maintaining a Hold rating on the company's shares.
This decision follows Edwards Lifesciences' reported second-quarter results which fell short of expectations. The company's adjusted revenue was $1,632.3 million, a 6.7% year-over-year increase but below the projected $1,672.3 million and the consensus estimate of $1,654.8 million.
Edwards Lifesciences also reported an adjusted earnings per share (EPS) of $0.70 for the quarter, which included a $0.04 benefit from a lower tax rate, narrowly beating the estimate of $0.69. However, the company's various business units, such as Transcatheter Aortic Valve Replacement (TAVR), Surgical Structural Heart (SSH), and Critical Care (CC), did not meet revenue estimates, except for the Transcatheter Mitral and Tricuspid Therapies (TMTT) unit.
The company has revised its sales forecast downward for the TAVR unit for the remainder of the year, although it expects TMTT sales to reach the higher end of the previous guidance range. The ongoing challenges in the TAVR market and the sale of its Critical Care business to BDX have led to a reclassification of revenue as sales from discontinued operations, impacting the optics of the second quarter's Generally Accepted Accounting Principles (GAAP) results.
In addition to the financial results, Edwards Lifesciences announced acquisitions totaling $1.2 billion, including JenaValve, which focuses on aortic regurgitation treatments, and Endotronix, which specializes in heart failure monitoring. These acquisitions follow a recent $300 million deal for Innovalve. While Edwards has not updated its full-year 2024 EPS guidance due to these changes, it plans to provide details following the third-quarter earnings call.
The company's strategy appears to be leveraging the proceeds from the Critical Care business sale to invest in growth opportunities beyond TAVR, as reflected in its recent acquisitions. Investors are expected to closely watch the upcoming EARLY TAVR data presentation at the Transcatheter Cardiovascular Therapeutics (TCT) conference in October, which may influence the company's growth trajectory.
In other recent news, Edwards Lifesciences reported an 8% increase in total sales for Q2, hitting the $1.6 billion mark. This growth was primarily driven by the company's Transcatheter Mitral and Tricuspid Therapies (TMTT) segment, which saw a significant 75% surge, outperforming Street estimates by about 45%.
On the other hand, Evercore ISI revised the company's stock outlook, reducing the shares target to $76 from the previous $91, following a revenue miss and a decrease in the growth outlook for the Transcatheter Aortic Valve Replacement (TAVR) product.
Despite these recent developments, CEO Bernard Zovighian expressed confidence in the company's growth potential. Edwards Lifesciences projects a full-year 2024 surgical sales growth of 6% to 8%, driven by the adoption of the RESILIA portfolio. The company also expects sustained long-term growth with double-digit revenue and earnings per share growth.
InvestingPro Insights
Edwards Lifesciences (NYSE:EW) presents a mixed financial landscape according to the latest data from InvestingPro. With a market capitalization of $52.4 billion, the company trades at a high earnings multiple, with a P/E ratio of 37.21 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 32.15. This valuation is above the industry average, indicating investors may expect higher growth from the company. InvestingPro Tips suggest that Edwards Lifesciences has been able to maintain low price volatility, suggesting a stable investment for risk-averse investors. Additionally, the company's ability to cover interest payments with its cash flows and its liquid assets surpassing short-term obligations provides a level of financial security.
Revenue growth remains positive, with an 11.68% increase over the last twelve months as of Q1 2024, and a quarterly increase of 9.5% in Q1 2024. Gross profit margins are strong at 76.63%, reflecting efficient operations. Furthermore, with an operating income margin of 28.84%, Edwards Lifesciences demonstrates profitability in its core operations. Despite recent adjustments to sales forecasts, the company's financial health is robust, with the ability to invest in growth opportunities as evidenced by recent acquisitions. Investors may find additional insights and tips, including the company's performance over the last decade and predictions for profitability this year, by exploring InvestingPro's full list of 11 tips. For those interested in a deeper analysis, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
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