Edwards Lifesciences' Sapien XT Gains Approval, Competition Rife - Analyst Blog

On Jun 26, we issued an updated research report on medical device major Edwards Lifesciences Corporation EW. Edwards reported a mixed first-quarter 2014 registering an earnings beat and a revenues miss.

Adjusted earnings per share of 76 cents inched up 2.7% year over year, reflecting a beat of 11.8% over the Zacks Consensus Estimate. Sales of $522.4 million were up 5.2% but missed the Zacks Consensus Estimate of $524 million.

As per expectation, on Jun 17, Edwards Lifesciences received the U.S. Food and Drug Administration (FDA) approval for its second generation SAPIEN XT transcatheter aortic heart valve in both inoperable and high risk patients. We believe the latest sanction for SAPIEN XT, received within a short span of Medtronic Inc.'s MDT CoreValve gaining the FDA approval, should prove beneficial for Edwards Lifesciences.

To date, Edwards Lifesciences has launched several new products, demonstrated strong clinical data and made significant progress on various key developments indicating sustainable future growth.

The company has managed to be in the limelight since the beginning of 2014. The company kick-started the year with the receipt of CE mark for its SAPIEN 3 in January and SAPIEN XT in February followed by the INTUITY Elite Valve System winning the same in April. With this, Edwards Lifesciences has become the only company in Europe to have received CE Mark for valve-in-valve procedures using the SAPIEN XT valve, providing minimally invasive treatment options to patients in need of surgical mitral or aortic valve replacement. In addition, the enrollmentof 1,000 intermediate risk patients in the U.S. SAPIEN 3 trial is on track and is expected to be completed by the end of this year.

In addition, unlike in the past several quarters, the company recorded healthy performance in Europe, especially within the THV franchise.

However, we are wary about the earlier-than-expected FDA approval of Medtronic's less-invasive heart valve – CoreValve, received in Jan 2014. Moving on, a tough European economic climate and a fiercely competitive landscape remain as potent downsides.

Other Stocks to Consider

While Edwards Lifesciences carries a Zacks Rank #3 (Hold), some notable stocks in the Medical Instruments sector are Globus Medical, Inc. GMED and Masimo Corporation MASI. Both the stocks hold a Zacks Rank #2 (Buy).