On Thursday, RBC Capital Markets adjusted its outlook on Edwards Lifesciences (NYSE:EW) stock, reducing the price target to $85 from the previous $101, while still endorsing the stock with an Outperform rating.
The revision follows the company's second-quarter results for 2024, which did not meet sales expectations, leading to a revision of the 2024 operational revenue growth forecast. Edwards Lifesciences now anticipates year-over-year growth of 8-10%, a scale-back from the previously projected higher end of the same range.
The tempered expectations are primarily due to the performance of the Transcatheter Aortic Valve Replacement (TAVR) market. Edwards Lifesciences has revised its 2024 and second-half 2024 worldwide TAVR outlook to 5-7% year-over-year growth, a decrease from the prior estimate of 8-10%.
In the United States, TAVR sales saw a modest increase of 5% in the second quarter, while the Transcatheter Mitral and Tricuspid Therapies (TMTT) segment outperformed expectations and projections were raised.
Despite the less than favorable earnings update, RBC Capital maintains its positive rating for Edwards Lifesciences. The firm's stance is buoyed by attractive end-markets, growing traction in TMTT, portfolio expansion including heart failure treatments, and the company's potential to achieve approximately 10% revenue growth and double-digit earnings per share growth.
This outlook reflects confidence in the company's capacity to navigate market challenges and capitalize on emerging opportunities within the structural heart therapy space.
In other recent news, Edwards Lifesciences reported second-quarter results that fell short of expectations, with an adjusted revenue of $1,632.3 million and an adjusted earnings per share (EPS) of $0.70.
Despite this, the company's Transcatheter Mitral and Tricuspid Therapies (TMTT) unit outperformed estimates, driving an 8% increase in total sales for Q2. Following these results, Canaccord Genuity and Evercore ISI revised their outlook on Edwards Lifesciences, reducing the shares target to $77 and $76 respectively.
Edwards Lifesciences also announced acquisitions totaling $1.2 billion, including JenaValve and Endotronix, which specialize in aortic regurgitation treatments and heart failure monitoring respectively.
The company has revised its sales forecast downward for the Transcatheter Aortic Valve Replacement (TAVR) unit for the remainder of the year, but expects TMTT sales to reach the higher end of the previous guidance range.
Despite the TAVR growth rate slowing to approximately 6%, the company's 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, and expects sustained long-term growth with double-digit revenue and earnings per share growth.
These recent developments are part of Edwards Lifesciences' ongoing efforts to navigate the complex healthcare landscape while focusing on innovation and market expansion.
InvestingPro Insights
Edwards Lifesciences (EW) appears to be navigating a complex market landscape, as reflected by RBC Capital Markets' updated outlook. Real-time data from InvestingPro underscores some of the financial dimensions that investors might consider. With a market capitalization of $52.4 billion and a high P/E ratio of 37.21, which adjusts to 32.15 for the last twelve months as of Q1 2024, Edwards Lifesciences is trading at a premium based on earnings. Additionally, the company's Price / Book ratio for the same period stands at 7.36, suggesting a high valuation in terms of its net asset value.
InvestingPro Tips highlight that Edwards Lifesciences has been profitable over the last twelve months and analysts predict the company will remain profitable this year. Moreover, the company's cash flows can sufficiently cover interest payments, and its liquid assets exceed short-term obligations, indicating a solid financial footing. It's also worth noting that Edwards Lifesciences does not pay a dividend, which could be a factor for income-focused investors to consider.
For those looking to delve deeper into Edwards Lifesciences' financial health and future prospects, additional InvestingPro Tips are available. Interested readers can find more in-depth analysis, including a total of 11 tips for Edwards Lifesciences, by visiting https://www.investing.com/pro/EW. To enhance your investment research on Edwards Lifesciences and other companies, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.