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Baird has updated its outlook on Edwards Lifesciences (NYSE: NYSE:EW), a prominent player in the medical device sector.
Analyst David Rescott increased the price target to $73.00 from the previous $70.00 while maintaining a Neutral rating on the company's stock.
The adjustment follows Edwards Lifesciences' performance expectations for the second quarter and the fiscal year 2024.
The company is anticipated to deliver results in line with forecasts, driven by steady growth in the Transcatheter Aortic Valve Replacement (TAVR) market and potential upside from the Transcatheter Mitral and Tricuspid Therapies (TMTT).
Rescott commented on the dynamics affecting Edwards Lifesciences, noting that while TAVR growth is projected to be within the 5-7% range, it might lean towards the lower end. The analyst also highlighted the lowered TAVR guidance for fiscal year 2024, suggesting that management has set more achievable targets. This recalibration could enable the company to recover some of the ground it has lost.
Furthermore, Rescott pointed to the upcoming data presentations at the Transcatheter Cardiovascular Therapeutics (TCT) conference, specifically the EARLY-TAVR and TRISCEND II studies, as potential catalysts for Edwards Lifesciences. Positive outcomes from these studies could bolster the company's market position.
However, the Baird analyst also expressed caution regarding the company's future, particularly for fiscal year 2025. The expectation is that revenue and earnings per share (EPS) estimates for 2025 may still need to be adjusted.
In other recent news, Edwards Lifesciences reported a $95 million revenue beat, achieving total sales of $1.63 billion. Following the sale of its Critical Care business to Becton Dickinson (NYSE:BDX), several firms, including Canaccord Genuity, Truist Securities, and Barclays, revised their price targets for Edwards Lifesciences.
Jefferies downgraded the company's stock rating from 'Buy' to 'Hold', citing concerns about the growth prospects for its Transcatheter Aortic Valve Replacement (TAVR) products. However, TD Cowen reaffirmed its Hold rating, influenced by anticipated favorable outcomes from the company's Early TAVR trial.
Morgan Stanley maintained a neutral stance with a price target of $70, noting the company's strong financial position and potential positive developments. The firm also suggested that the current stock price already reflects expected growth. Piper Sandler maintained a neutral position on shares of Edwards Lifesciences, highlighting the upcoming presentation of the EARLY-TAVR study results.
InvestingPro Insights
Adding to Baird's analysis, InvestingPro data provides further context on Edwards Lifesciences' financial position. The company's market capitalization stands at $41.95 billion, reflecting its significant presence in the medical device sector. Edwards Lifesciences has demonstrated strong profitability, with a gross profit margin of 76.38% for the last twelve months as of Q2 2024, indicating efficient cost management in its core operations.
InvestingPro Tips highlight that Edwards Lifesciences operates with a moderate level of debt and has liquid assets exceeding short-term obligations, which aligns with the stability needed to navigate the cautious outlook presented by Baird. Additionally, the company's high return over the last decade suggests a track record of delivering value to shareholders, despite not paying dividends.
However, investors should note that Edwards Lifesciences is trading at a high P/E ratio relative to near-term earnings growth, with a PEG ratio of 3.53. This valuation metric may warrant careful consideration, especially in light of Baird's cautious stance on 2025 projections.
For readers seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Edwards Lifesciences, providing deeper insights into the company's financial health and market position.
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