Edwards Lifesciences Corporation (EW) is part of the Medical Technology industry, where it helps treat structural heart diseases and critical illnesses. The company is in the right place at the right time to keep on winning on Wall Street.
As a result, I’m bullish on Edwards Lifesciences shares. (See Analysts’ Top Stocks on TipRanks)
Last week, Edwards Lifesciences reported strong Q3 financial results. Sales grew 15% to $1.3 billion, driven by a strong performance from the Transcatheter Aortic Valve Replacement (TAVR) product group.
In addition, EPS was $0.54, beating analyst estimates. Things could have been even better if it wasn’t for the resurgence of the Delta variant that led to the deferral of some procedures.
“Third-quarter sales increased 15% versus the year-ago period, despite the pronounced impact of the Delta variant in the U.S.,” said Michael A. Mussallem, chairman and CEO. “We believe some procedures were unfortunately deferred in the third quarter, and we expect many of these patients who deferred treatment will be treated in the future. We continue to expect total company sales growth to be in the high-teens for the full year.”
In the Right Place
Edward Lifesciences operates in an industry with few players and strong barriers to entry, meaning that these companies enjoy an oligopoly and economies of scale.
As a result, each player has a sustainable competitive advantage that translates into superior equity returns over the long term. Over the last ten years, shares of Edwards Lifesciences have delivered an annual compound return of 25.1% compared to a 16.4% return of the S&P 500.
At the Right Time
The timing for being in the Medical Technology industry couldn’t be better. The industry is enjoying several tailwinds, like the massive aging of the baby boomer generation. This is a worldwide trend that can be traced back to 2006 when the first baby boomer cohort crossed 60 years of age.
In addition, there’s the Affordable Care Act in the U.S. that makes health insurance available to more people. As a result, this helps boost the demand for medical services.
TipRanks’ Smart Score
According to TipRanks’ Smart Score rating system, EW scores a perfect 10, citing strong fundamentals, technicals, news sentiment, and increased hedge fund activity as some of the key reasons.
Wall Street’s Take
Turning to Wall Street, Edwards Lifesciences has a Moderate Buy consensus rating, based on six Buys and four Holds assigned in the past three months. The average Edwards Lifesciences price target of $124.89 implies 4.2% upside potential.
Analyst price targets range from a low of $105.00 per share to a high of $135.00 per share.
The Bottom Line
Edwards Lifesciences is in the right place at the right time. The company is ready to deliver superior market returns once the pandemic is over and surgical procedures resume their average pace.
Disclosure: At the time of publication, Panos Mourdoukoutas owned shares of Edwards Lifesciences.
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