On Thursday, Edwards Lifesciences (NYSE:EW) stock experienced a shift in ratings as TD Cowen adjusted its stance on the company from Buy to Hold. The firm also revised its price target for the medical device maker, reducing it to $70 from the previous figure of $100.
The downgrade is a result of TD Cowen's anticipation of high single-digit (HSD) revenue growth for Edwards Lifesciences in 2024 and 2025, citing a slowdown in the Transcatheter Aortic Valve Replacement (TAVR) market as the primary factor.
Additionally, the firm projects low single-digit (LSD) earnings growth in 2025. These projections take into account the expected impact of the Critical Care division's divestiture on the company's financials.
TD Cowen's new price target of $70 is based on a 27 times multiple of the estimated earnings per share (EPS) for the year 2025. The adjustment in the price target reflects the revised expectations for the company's top and bottom lines.
The analyst from TD Cowen elaborated on the decision, stating, "We are downgrading EW to Hold as we are now forecasting HSD revenue growth in 2024 and 2025 due to the deceleration in the TAVR market. We are also modeling LSD earnings growth in 2025 after accounting for the downward top-line revision and the pending Critical Care divestiture."
The updated outlook and price target from TD Cowen come as significant indicators for investors monitoring Edwards Lifesciences' performance in the evolving medical devices industry. The company's stock will continue to be watched closely as the market assesses the impact of these forecasted changes.
In other recent news, Edwards Lifesciences reported a decrease in growth for its Transcatheter Aortic Valve Replacement (TAVR) product, leading to several firms adjusting their outlook on the company.
Piper Sandler, RBC Capital Markets, Canaccord Genuity, and Evercore ISI all reduced their share price targets, while maintaining neutral to positive ratings. This follows the company's second-quarter results, which showed a lower-than-expected TAVR growth and a subsequent reduction in guidance.
However, the company's Transcatheter Mitral and Tricuspid Therapies (TMTT) segment outperformed expectations, driving an 8% increase in total sales for Q2. Additionally, the company announced acquisitions totaling $1.2 billion, including JenaValve and Endotronix, which specialize in aortic regurgitation treatments and heart failure monitoring respectively.
Despite the challenges in the TAVR market, 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
In light of the recent stock rating changes for Edwards Lifesciences (NYSE:EW), current metrics from InvestingPro provide a deeper financial context. With a market capitalization of $52.4 billion and a trailing P/E ratio of 37.21, which adjusts to 32.15 for the last twelve months as of Q1 2024, the company is trading at a high earnings multiple. This aligns with the TD Cowen's assessment and reflects a premium valuation in the market.
InvestingPro data reveals a solid financial foundation, with a gross profit margin of 76.63% for the same period, indicating strong profitability in operations. Additionally, the company's revenue has grown by 11.68% over the last twelve months, as of Q1 2024, showcasing a positive trend in sales. Edwards Lifesciences also maintains a robust financial position, with liquid assets that exceed short-term obligations, as indicated by the two InvestingPro Tips that highlight the company's ability to cover interest payments and manage its moderate level of debt effectively.
For investors seeking a comprehensive analysis, InvestingPro offers additional insights, including a total of 11 InvestingPro Tips for Edwards Lifesciences, which can be accessed at https://www.investing.com/pro/EW. To explore these tips and gain an edge in your investment strategy, use the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. These tips provide valuable information that can help investors make more informed decisions in the context of the company's current market performance and future prospects.
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