On Monday, Canaccord Genuity revised its price target for shares of Edwards Lifesciences (NYSE: NYSE:EW), a prominent medical technology company, from $77.00 to $66.00, while maintaining a Hold rating. This adjustment follows the recent sale of the company's Critical Care business to Becton Dickinson (NYSE:BDX) in early September 2024 for approximately $4.2 billion.
The firm's analyst highlighted that 2025 is anticipated to be a transition year for Edwards Lifesciences following the divestiture. The revised model takes into account the financial data from the first halves of 2024 and 2023, which helped segregate the Critical Care business's financials. Moreover, Edwards Lifesciences' management has indicated that both margins and earnings for 2025 are expected to be significantly lower compared to 2024, with a return to growth projected in 2026.
The adjustments to the company's revenue projections involve the exclusion of the Critical Care business. The analyst also accounted for the impact of recent share buybacks and projected a 3.5% interest on the remaining net cash of approximately $3.7 billion for 2025. Despite a reduction in force (RIF) involving 540 employees in early September, slightly increased investments in operations are anticipated.
As a result of these changes, Canaccord Genuity has lowered its adjusted earnings per share (EPS) estimates for Edwards Lifesciences for the years 2025 and 2026 by $0.48 each year. The new estimates are set at $2.62 for 2025, down from the prior estimate of $3.10, and $2.95 for 2026, down from $3.43.
The report also notes that Edwards Lifesciences' management is not expected to provide guidance for 2025 until the investor meeting scheduled for Wednesday, December 4, 2024, in New York City. In addition to the revised earnings estimates, the firm anticipates the third quarter of 2024 financials and underscores several important factors for investors to watch for the remainder of the fiscal year.
These include data from the Transcatheter Cardiovascular Therapeutics (TCT) conference, further details on the company's recent acquisitions, and the New Technology Add-on Payment (NTAP) for EVOQUE, which is expected to aid in the product's utilization and commercial ramp-up.
In other recent news, Edwards Lifesciences reported a $95 million revenue beat, achieving total sales of $1.63 billion. The company has been the focus of several financial adjustments and projections, with TD Cowen maintaining its Hold rating influenced by anticipated favorable outcomes from the company's Early TAVR trial.
Despite this, Jefferies downgraded the company's stock rating from 'Buy' to 'Hold', citing concerns about the growth prospects for its Transcatheter Aortic Valve Replacement (TAVR) products.
Truist Securities and Barclays have both reduced their price targets for Edwards Lifesciences' stock to $71 and $80 respectively, while maintaining their ratings. These adjustments come after the sale of Edwards Lifesciences' Critical Care division and reflect recalibrated earnings and operating results projections.
Wells Fargo also lowered its price target for the company's shares from $90 to $80, due to the removal of the Critical Care unit from projections. Despite these changes, Wells Fargo maintained an Overweight rating on the company.
Lastly, Citi reaffirmed its Buy rating on Edwards Lifesciences stock with a steady price target of $83, initiating a 90-day Positive Catalyst Watch ahead of the Transcatheter Cardiovascular Therapeutics (TCT) conference. These are the recent developments that are shaping the financial outlook for Edwards Lifesciences.
InvestingPro Insights
In light of Canaccord Genuity's revised outlook for Edwards Lifesciences, it's worth considering additional financial metrics and insights from InvestingPro. Despite the anticipated transition year in 2025, Edwards Lifesciences maintains a strong market position with a market capitalization of $39.45 billion. The company's revenue growth of 19.3% over the last twelve months as of Q2 2024 demonstrates its ability to expand in the medical technology sector.
InvestingPro Tips highlight that Edwards Lifesciences operates with a moderate level of debt and has liquid assets exceeding short-term obligations, which could provide financial flexibility during the transition period. Mooreover, the company's high return over the last decade suggests a track record of creating shareholder value.
However, investors should note that Edwards Lifesciences is trading at a high P/E ratio relative to near-term earnings growth, with a PEG ratio of 3.32. This valuation metric aligns with Canaccord Genuity's cautious stance and Hold rating.
For readers seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Edwards Lifesciences, providing deeper insights into the company's financial health and market position.
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