There are signs of green shoots around the corner for Edwards Lifesciences, an analyst said Wednesday as EW stock surged to a three-month high.
During the December quarter, revenue came in 100 basis points above forecasts, Evercore ISI analyst Vijay Kumar said in a note to clients. Analysts expected sales to be flat. Instead, the medical devices giant put up 1% sales growth, reporting $1.35 billion. Excluding the impact of exchange rates, sales rose 7%.
Adjusted earnings soared 25% to 64 cents per share.
Now, the company is calling for stronger growth. Last year, sales advanced 8% — minus the impact of exchange rates — as the "challenging environment negatively impacted sales," Chief Executive Michael Mussallem said in prepared remarks. This year, Edwards Lifesciences expects sales to increase 9%-12% in constant currency.
"Edwards has continued to aggressively invest during this transient Covid environment, which positions our company for strong growth and leadership in a new era for structural heart and critical care innovation," he said.
On the stock market today, EW stock jumped 6.2% to close at 81.48. Shares are above their 50-day moving average, according to MarketSmith.com.
EW Stock: Critical Care Leads Growth
The revenue beat came from Edwards' critical care business, BTIG analyst Marie Thibault said in a note.
Meanwhile, sales from transcatheter aortic heart-valve replacements and transcatheter mitral tricuspid therapies — methods of replacing diseased heart valves without resorting to surgery — were in line with expectations. Surgical heart-valve replacements also met forecasts, she said.
Critical care sales increased 6% to $225 million, benefitting from increased sales of blood pressure and respiratory monitor sales. Structural heart sales also rose 1% to $224 million. Sales of these businesses grew a respective 13% and 8% in constant currency.
Edwards' biggest division, though, is its transcatheter aortic heart-valve replacements. This is a nonsurgical way of replacing faulty heart valves. On a strict, as-reported basis, sales were flat. But, minus the impact of exchange rates, revenue climbed 5% to $868 million.
Evercore's Kumar raised his price target on EW stock to 84 from 82 and kept his outperform rating. He sees "signs of green shoots around the corner." That's reflected in the company's outlook for 2023 — 9%-12% sales growth, minus the impact of exchange rates. EW stock analysts forecast earnings of $2.49 a share and $5.79 billion in sales.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
