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Valued at around $39 billion by market cap, Edwards Lifesciences Corporation (EW) operates in the medical devices sector. The California-based company specializes in innovative solutions for advanced cardiovascular diseases, including tissue heart valves and hemodynamic monitoring systems for critically ill patients.
Shares of the medical device maker have significantly underperformed the broader market over the past 52 weeks. EW has declined 17.1% during this period, contrasting with the S&P 500 Index's ($SPX) robust rally of 19.6%. In 2024, EW shares dipped 15.2%, lagging behind SPX's 12% gain on a YTD basis.
Zooming in further, EW's performance trails behind the US Medical Devices iShares ETF (IHI), which has recorded gains of 4.8% over the past 52 weeks and a 3.4% increase on a YTD basis.
Edwards Lifesciences has underperformed over the past year due to slower growth in its transcatheter aortic valve replacement (TAVR) business and margin pressure from currency fluctuations. The company also faced challenges with earnings stagnation and the sale of its Critical Care unit, which impacted investor sentiment.
Moreover, the stock plummeted 31.3% on Jul.25 following its Q2 earnings release because the company's revenue of $1.4 billion significantly missed analysts' estimates of $1.7 billion, driven by weaker-than-expected demand for its artificial heart valves. In addition, the company revised its TAVR sales forecast downward, adding to investor concerns.
For the current fiscal year, ending in December, analysts expect EW's EPS to grow almost 8% year over year to $2.71 per share. The company's earnings surprise history is promising. It topped or met the consensus estimates in all of the last four quarters.
The consensus rating among the 26 analysts covering the stock is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, one “Moderate Buy,” 14 “Holds,” and one “Strong Sell.”
This configuration is less bullish than three months before, with 12 analysts suggesting a "Strong Buy."
On Jul. 25, Deutsche Bank lowered its price target for Edwards Lifesciences to $85 and maintained a "Buy" rating, citing a slowdown in transcatheter aortic valve replacement but expressing confidence in the potential upside from Evoque.
The mean price target of $79.12 represents a premium of 22.4% to EW's current levels. The Street-high price target of $91 implies a modest potential upside of 40.8% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
