There are signs Edwards Lifesciences' heart valve replacement technology is reaccelerating, an analyst said Wednesday. But EW stock floundered after its fourth-quarter report.
Shares surged 19.4% from Jan. 30 to the close on Tuesday, helped by the three-months-early approval of Edwards' Evoque system. Evoque is a nonsurgical means of replacing a faulty tricuspid valve in the heart. Further, rival Boston Scientific is facing setbacks on entering the aortic valve replacement market in the U.S., Evercore ISI analyst Vijay Kumar said in a report.
"The question is how much of this was already priced in and whether the fundamental debate on EW has changed," Kumar said in a report.
William Blair analyst Margaret Kaczor Andrew, though, says things are changing for Edwards, which sells a variety of methods to replace or augment failing parts of the heart. Andrews says there are "early signs of reacceleration ahead of (a) catalyst-filled year."
But on today's stock market, EW stock sank 1.9% to 86.61. Shares are now forming a cup base with a buy point at 94.87, according to MarketSmith.com.
EW Stock: Earnings Meet, Sales Narrowly Beat
Late Tuesday, Edwards Lifesciences reported adjusted income of 64 cents per share for the fourth quarter. Earnings met expectations and were flat year over year.
Sales grew 14% to $1.53 billion, slightly ahead of EW stock analysts' forecast for $1.5 billion, according to FactSet. Excluding the impact of exchange rates, sales increased 13%.
Globally, transcatheter aortic heart valve replacement, or TAVR, sales climbed 12%, Evercore's Kumar said. TAVR is a means of replacing the aortic heart valve without resorting to open-heart surgery. But not all patients are eligible for a TAVR procedure.
Still, Edwards expects TAVR sales — and total sales — to grow 8% to 10% this year. Total sales would come out to $6.3 billion to $6.6 billion. The company also called for 9% to 11% adjusted earnings growth, or $2.70 to $2.80 per share.
The guidance was in line with expectations. EW stock analysts forecast earnings of $2.76 a share and $6.49 billion in sales.
The 'Forgotten' Heart Valve
Edwards now expects revenue from its transcatheter mitral and tricuspid therapies division to arrive at the high end of its outlook for $280 million to $320 million due to the early approval of Evoque. Kumar noted mortality and hospitalization data for the study that clinched Evoque's early approval are both trending in the right direction.
Meanwhile, Abbott Laboratories is facing a Food and Drug Administration panel next week to discuss the benefits and risks of its tricuspid valve replacement system.
"While this is a positive, tricuspid is known as the forgotten valve and the procedure is difficult," he said.
Edwards will need to show the Evoque procedure leads to superior outcomes over surgical replacement. Without that, adoption might be an uphill battle for Evoque.
Kumar kept his in-line rating on EW stock, but raised his price target to 86 from 77.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
