On Thursday, Wolfe Research adjusted its perspective on Edwards Lifesciences (NYSE:EW) shares, downgrading its rating from Peerperform to Underperform. The firm also set a price target of $60.00 for the medical technology company's stock, which currently trades at $70.28.
According to InvestingPro analysis, Edwards Lifesciences maintains a "GREAT" financial health score of 3.04, with multiple positive indicators suggesting potential resilience despite the downgrade.
The downgrade comes amid Wolfe Research's concerns over the growth prospects for Edwards Lifesciences, particularly in comparison to its peers in the high-single-to-10%+ organic growth med tech segment. The firm's analysts project median growth rates for this group at 9% for 2025 and 8% for 2026, whereas their model for Edwards Lifesciences indicates slightly lower growth rates of 8% and 7% respectively.
However, InvestingPro data shows the company achieved impressive revenue growth of 24.02% in the last twelve months, with strong fundamentals including a healthy current ratio of 3.46 and minimal debt-to-equity of 0.07.
In their assessment, Wolfe Research analysts cited a six-year data point from November that raised fresh worries about the TAVR market and Edwards Lifesciences' market share. Despite the potential for market expansion through new indications for TAVR, the analysts noted that the impact and timing are uncertain, and significant hospital capacity expansion would be necessary.
Moreover, the firm expressed caution regarding the ramp-up of Transcatheter Mitral and Tricuspid Therapies (TMTT), which has shown some fluctuation and presents a financial outlook that is challenging to fully embrace at this stage.
The analysts also considered the competitive landscape, acknowledging the possibility of Johnson & Johnson (JNJ) entering the market, which could pose a significant threat to Edwards Lifesciences. However, they noted that Johnson & Johnson has recently redirected its free cash flow towards an acquisition in the neuropsychiatric biotech space, which may reduce the likelihood of an aggressive move into Edwards Lifesciences' territory in the near term.
The price target of $60.00 is based on a price-to-earnings (P/E) ratio of 25, which is slightly below the median P/E ratio of 26 for the peer group. This P/E ratio was applied to the firm's estimated earnings per share (EPS) for Edwards Lifesciences of $2.40 in 2025 and $2.60 in 2026.
InvestingPro's comprehensive analysis indicates the stock is currently undervalued, with 8 additional ProTips and extensive financial metrics available to subscribers, including detailed valuation models and peer comparison tools.
In other recent news, Edwards Lifesciences has been at the center of several analyst adjustments. Jefferies maintained a Hold rating on the company's stock, citing a year-over-year revenue decline of 2.7% for November 2024 in the U.S. TAVR market. However, the firm noted that the U.S. TAVR revenue for the fourth quarter to date has grown by 6.5%, surpassing the consensus estimate of 4% growth. Edwards Lifesciences also faces potential risks of pricing pressures and market share losses, but the expected acquisition of Jenavalve could further impact the company's financials.
RBC Capital Markets projected a favorable outlook for the Medical (TASE:PMCN) Supplies & Devices sector for 2025, identifying significant upside opportunities in stocks such as Edwards Lifesciences. The firm's surveys indicate strong potential catalysts and market growth for the company, particularly in transcatheter valve therapies.
BofA Securities upgraded Edwards Lifesciences from a Neutral to a Buy rating and increased the price target to $90 from the previous $82. The firm anticipates a positive trajectory for the company's stock in 2025, driven by multiple potential catalysts and the strategic importance of its TAVR technology.
TD Cowen maintained a Hold rating on Edwards Lifesciences' stock after the company presented a favorable multiyear outlook. The company reiterated its 2024 guidance and introduced its 2025 projections, including a return to double-digit annual revenue growth and sustaining double-digit growth in earnings per share.
Lastly, Bernstein SocGen Group kept its Market Perform rating on Edwards Lifesciences with a steady price target of $72.00. The company has set a TAVR growth forecast at 5%-7% for 2025, with expectations to accelerate to mid-single to high-single digits in TAVR growth beyond 2026.
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