On Friday, CFRA raised the stock price target on Edwards Lifesciences (NYSE:EW) to $99 from the previous target of $96, while maintaining a Buy rating on the stock. The adjustment comes after the company reported a first-quarter earnings per share (EPS) of $0.66, surpassing the consensus estimate by $0.02. The company's Transcatheter Aortic Valve Replacement (TAVR) sales experienced an 8% increase on a constant currency basis.
Edwards Lifesciences also saw an improvement in procedure trends as the first quarter progressed, which is expected to positively influence future quarters. Despite a year-over-year gross margin contraction of 150 basis points, the company attributed much of this decrease to unfavorable foreign exchange rates. In response to these results, Edwards Lifesciences has updated its revenue growth guidance for 2024 to the higher end of its previously stated 8%-10% range.
The company has announced plans to spin off its Critical Care business, which accounted for 16% of first-quarter sales and saw a notable growth rate of 14%. However, CFRA predicts that this high growth rate might not continue at the same level.
Despite this, the firm remains optimistic about the growth potential of Edwards Lifesciences' Transcatheter Mitral and Tricuspid Therapies (TMTT) business. The company is recognized for its continuous innovation, particularly in the development of new therapies in the TMTT segment.
CFRA's adjusted 12-month target price of $99 reflects a 32 times multiple of their projected 2025 EPS estimate of $3.09, aligning with Edwards Lifesciences' long-term historical forward average. Additionally, CFRA has increased its 2024 EPS estimate by $0.03 to $2.78, while maintaining the 2025 estimate at $3.09.
InvestingPro Insights
Edwards Lifesciences (NYSE:EW) has been demonstrating a robust financial performance, with a market capitalization of $52.19 billion and a high gross profit margin of 76.63% over the last twelve months as of Q1 2024.
This aligns with the company's recent earnings beat and its updated revenue growth guidance. Investors should note that the company is trading at a high earnings multiple, with a P/E ratio of 37.08 and an adjusted P/E ratio of 32.15, which may reflect market expectations of future growth, particularly in light of the TAVR sales increase and the potential of the TMTT segment.
Moreover, Edwards Lifesciences has been actively managing its financials, as indicated by an InvestingPro Tip that the management has been aggressively buying back shares. This could signal confidence from the management in the company's future performance. Another positive aspect is that the company's liquid assets exceed short-term obligations, suggesting financial stability and the ability to meet its immediate financial commitments.
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