Edwards Lifesciences is the IBD Stock Of The Day as the easing Covid pandemic allows for bullish growth in nonsurgical heart-valve replacements — and a potential EW stock surge.
The company sells the tools to replace diseased heart valves. Its biggest business is in replacing aortic valves in a procedure called transcatheter aortic heart-valve replacement, or TAVR. The nonsurgical procedure involves threading a new valve through the femoral artery. All together, Edwards estimates its nonsurgical valve replacements could see a $15 billion opportunity.
Credit Suisse analyst Matt Miksic expects the U.S. to add 55 new TAVR centers this year. He also expects Edwards Lifesciences to report as much as $587 million in first-quarter U.S. TAVR sales. That's above FactSet's call for $542 million.
"Our estimates and model reflect improving elective surgery trends throughout the first quarter, and easing staffing-related challenges in the U.S.," he said in a report.
On today's stock market, EW stock fell a fraction to close at 119.28.
EW Stock: Leaning Into Nonsurgical Trends
The first TAVR procedure was performed 20 years ago. Previously, the only means of replacing a faulty aortic valve was through open-heart surgery.
In the fourth quarter, TAVR procedures represented nearly two-thirds of Edwards' total revenue.
The company also offers the tools to surgically replace an aortic heart valve and critical care tools. Further, it has an emerging transcatheter mitral and tricuspid therapies segment that generated $25 million in sales. These are nonsurgical methods of replacing mitral and tricuspid valves.
Edwards estimates the global opportunity for its mitral and tricuspid replacement tools to be $5 billion by 2028. The company says its TAVR division could face a $10 billion opportunity by the same year, according to the company's fourth-quarter report.
Miksic reiterated his outperform rating and 144 price target on EW stock on Monday.
"Given the acute lifesaving nature of the TAVR procedure, Covid hospitalizations in the U.S. at 18-month lows and the under-penetrated nature of the U.S. TAVR market, we continue to expect U.S. TAVR growth to be in the mid-teens with more difficult comparisons in the first half 0f 2022 and accelerating year-over-year growth in the second half of 2022," he said.
Edwards representatives didn't immediately return a request for comment.
Shares Eye A Buy Point
Analysts polled by FactSet expect Edwards to report adjusted profit of 57 cents per share for the first quarter. Earnings would rise roughly 6%. Sales are projected to increase nearly 8% to $1.31 billion, according to EW stock analysts.
The lion's share of forecasted TAVR sales will come from the U.S. But in all geographies — U.S., Europe, Japan and international — analysts expect Edwards to report first-quarter sales growth.
Meanwhile, EW stock is working on a cup-with-handle base with a buy point at 125.21, according to MarketSmith.com. Shares are also well ahead of their 50-day and 200-day moving averages. There's also a possible options play on Edwards shares.
Bullishly, Edwards stock has a Relative Strength Rating of 87. The RS Rating is a 1-99 measure of a stock's 12-month performance. Leading stocks tend to have RS Ratings of at least 80 before making their big moves.
Shares also have a strong Composite Rating of 90, which IBD Digital uses to measure a stock's fundamental and technical metrics.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
