On Thursday, Mizuho maintained its Outperform rating on Edwards Lifesciences (NYSE:EW) but reduced the price target to $85 from the previous $105.
The adjustment follows Edwards Lifesciences' latest financial results which revealed a $95 million revenue beat but also showed that its core global Transcatheter Aortic Valve Replacement (TAVR) segment underperformed expectations by $20 million, recording actual sales of $1.04 billion compared to the anticipated $1.06 billion.
The slower-than-expected performance in the TAVR segment in the U.S. was attributed to a combination of factors. These included a crowding out effect from competing procedures, such as Mitral and Tricuspid surgeries, and extended wait times for surgery owing to ongoing imaging limitations.
As a result of these challenges, the company has revised its full-year TAVR growth guidance down to 5-7% year-over-year, a decrease from the previously projected 8-10% growth.
The revised guidance reflects concerns about a structural slowdown in the core business segment. In light of these developments, Mizuho has recalibrated its expectations for the company's stock performance, leading to the lowered price target.
Despite the near-term headwinds and the reduction in the price target, Mizuho stands by its Outperform rating, indicating a belief that the stock may recover after the recent market correction.
In other recent news, Edwards Lifesciences has seen a series of adjustments to its stock price targets by various firms following its recent financial disclosures. BofA Securities downgraded the stock from Buy to Neutral and reduced the price target from $105 to $75, citing two consecutive quarters of missed Transcatheter Aortic Valve Replacement (TAVR) sales and a lowered TAVR outlook for 2024.
Similarly, Oppenheimer revised the price target downwards to $90 from $100, while maintaining an Outperform rating on the company's shares. TD Cowen also adjusted its stance on the company from Buy to Hold and reduced its price target to $70, citing a slowdown in the TAVR market.
The company reported second-quarter 2024 revenue from continuing operations at $1.39 billion, with total sales reaching $1.63 billion. However, TAVR revenue was $1.04 billion, marking a 4.7% year-over-year increase, albeit slightly below the $1.06 billion anticipated by the firm and consensus.
The company has adjusted its growth expectations for TAVR in the second half of the year to align with the first half's performance, projecting a 5-7% increase on a constant currency basis.
Edwards Lifesciences also recently announced the acquisition of JenaValve Technology and Endotronix, totaling an investment of $1.2 billion. These recent developments reflect the company's ongoing efforts to navigate the complex healthcare landscape while focusing on innovation and market expansion.
Despite the challenges in the TAVR market, the company projects a full-year 2024 surgical sales growth of 6% to 8%, driven by the adoption of the RESILIA portfolio.
InvestingPro Insights
In light of Mizuho's recent rating and price target adjustment for Edwards Lifesciences, a glance at the real-time data from InvestingPro provides additional context for investors. The company's market capitalization stands at $52.4 billion, reflecting its significant presence in the medical devices industry. 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, Edwards Lifesciences is trading at a high earnings multiple, which is indicative of investors' high expectations for future earnings growth.
InvestingPro Tips suggest that despite trading at a high EBITDA valuation multiple, the company's cash flows can sufficiently cover interest payments, and its liquid assets exceed short-term obligations. These factors contribute to the company's financial stability and could reassure investors of its ability to weather potential market volatility. Additionally, analysts predict the company will be profitable this year, which aligns with the company's profitable performance over the last twelve months.
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