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On Tuesday, Truist Securities increased its price target for Edwards Lifesciences (NYSE: NYSE:EW) to $110.00, up from the previous target of $105.00, while maintaining a Buy rating on the stock.
The firm's analyst cited the company's consistent double-digit (DD) growth in both top and bottom lines, along with expansion opportunities in the total addressable market (TAM), as key factors supporting the valuation.
The new price target of $110.00 is based on applying a roughly 27 times multiple to the estimated 2025 EBITDA, which, according to the firm, is below Edwards Lifesciences' five-year average of approximately 30 times next twelve months (NTM) EV/EBITDA and below its historical price-to-earnings (P/E) ratio average of around 37 times.
The analyst believes that a market valuation premium for Edwards Lifesciences is justified due to the company's growth prospects and its potential to continue leading in innovation.
Edwards Lifesciences is recognized for its advancements in treating aortic stenosis (AS) and mitral/tricuspid regurgitation (MR), with the analyst expecting sustained revenue growth driven by increased penetration into large, undertreated patient populations. The firm foresees this trend continuing through the end of the decade.
The Truist Securities analyst also noted that Edwards Lifesciences' valuation premium relative to the S&P 500 is warranted. Historically, the company has traded at a premium of approximately 1.9 times compared to the S&P 500's five-year average of about 2.2 times NTM EV/EBITDA. This reflects the company's strong market position and the expectation of ongoing robust growth in its end markets.
In other recent news, Edwards Lifesciences is set to acquire Innovalve Bio Medical, a deal valued at approximately $300 million. Innovalve's Innostay TMVR System is under evaluation, and the acquisition is expected to strengthen Edwards Lifesciences' portfolio of therapies. Edwards Lifesciences also confirmed that its SAPIEN M3 device is on track for European approval by 2025.
In executive changes, Senior Vice President and Principal Accounting Officer, Robert W.A. Sellers, is set to retire in 2024, with Andrew M. Dahl succeeding him. Edwards Lifesciences is also selling its Critical Care business to Becton, Dickinson and Company for $4.2 billion, a move that aligns with its focus on structural heart disease innovations.
Goldman Sachs recently added Edwards Lifesciences to its US Conviction List, while Citi upgraded shares from Neutral to Buy. These developments are part of the company's recent strategic moves and analyst sentiments.
InvestingPro Insights
Following the optimistic outlook from Truist Securities, InvestingPro data corroborates the strong financial standing of Edwards Lifesciences (NYSE: EW). The company boasts a robust market capitalization of $53.93 billion and a high gross profit margin of 76.63% over the last twelve months as of Q1 2024. This illustrates the company's efficiency in managing its production costs and sustaining profitability. Additionally, Edwards Lifesciences has demonstrated an impressive revenue growth of 11.68% during the same period, highlighting its dynamic growth trajectory.
InvestingPro Tips suggest that while the stock is trading at a high earnings multiple of 38.26, indicating investor confidence in future earnings potential, it also trades with low price volatility, providing a relatively stable investment option. Moreover, the company's cash flows can sufficiently cover interest payments, which is a reassuring sign of financial health for investors. It's worth noting that Edwards Lifesciences is trading near its 52-week high, at 93.11% of this threshold, suggesting a strong market position.
For investors looking for more detailed analysis and additional InvestingPro Tips, there are 11 more tips available that could help in making a more informed decision. To explore these further, visit https://www.investing.com/pro/EW and consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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