3 Reasons To Own Edwards Lifesciences

Looking for a compelling reason to buy shares of Edwards Lifesciences Corp EW? Here are three reasons, courtesy of Search Results Canaccord Genuity's Jason Mills.

Shares of Edwards were trading higher by nearly 9 percent on Wednesday and hit an intra-morning high of $113.04 following the company's strong earnings beat. But Mills sees upside for the stock as high as $140 by the end of the year for three primary reasons.

1. TAVR Prospects

Edwards' Transcatheter aortic valve replacement has plenty of room to grow over the years. According to Mills, the total addressable market for valve replacements will be $5.3 billion by 2021 and the company "clearly possesses" a best-in-class technology with its TAVR.

Edwards also boasts a "robust" pipeline of other products including Centara, Ultra and Inspiris tissue technology.

2. Earnings Power

Mills noted that his prior thesis of operating leverage from TAVR growth was evident in the quarter. The analyst's calculations found that incremental operating margins on TAVR revenue in 2017 could be more than 70 percent and were $40 million in organic TAVR revenue in the first quarter.

3. Other Opportunities

Aside from TAVR, Edwards' TMVRe (repair) portfolio could "positively surprise" investors before other product lines like CardiAQ plays out in 2019. Other notable contributors include Cardioband and Pascal, both of which can address mitral regurgitation and tricuspid regurgitation — two under-treated and deadly conditions.

Bottom Line

Bottom line, the analyst views Edwards as "one of the most attractive large-cap growth stocks" given its dominance, large TAM, potential for margin leverage and double-digit earnings per share growth, and a strong pipeline of products.

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2017 Promises To Be An Interesting Year For Edwards Lifesciences

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