Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Edwards Lifesciences (EW) Q2 Earnings: A Surprise in Store?

Edwards Lifesciences Corporation EW is scheduled to report second-quarter 2017 earnings on Jul 26, after market close.

Last quarter, the company had posted a positive earnings surprise of 14.63%. It is worth noting that Edwards Lifesciences has outperformed the Zacks Consensus Estimate in three of the preceding four quarters, with an average positive earnings surprise of 7.21%. Let’s take a look at how things are shaping up prior to this announcement.

Factors at Play

Edwards Lifesciences posted strong global sales in the last reported quarter, primarily buoyed by strength in Transcatheter Heart Valve(TAVR). Banking on continued therapy adoption across all geographies with notable strength in the U.S., the company is expected to maintain this bullish trend in the second quarter of 2017 as well.

In the TAVR space, Edwards Lifesciences reported highly encouraging European post-approval clinical trial results for its SAPIEN 3 transcatheter heart valve in May 2017. The company also demonstrated successful results pertaining to its CENTERA valve for transcatheter aortic valve replacement procedures in the much awaited EuroPCR 2017 held in May.

Edwards Lifesciences Corporation Price and EPS Surprise

 

We are also upbeat about the company’s initiative of strategic investment in research and development and receipt of regulatory approvals for those products. Moving on, the latest breakthrough achieved in its TAVR segment is the FDA approval for its SAPIEN 3 valve in early Jun 2017.

Bullish on the company’s ongoing performance, management raised growth expectations to the high end of the projected full-year 2017 guidance for each segment.

Moreover, we note that the company projected total sales between $810 million and $850 million and adjusted earnings per share of 82 cents to 92 cents for the second quarter.

Apart from this, management completed the acquisition of Israel-based Valtech Cardio, a developer of Cardioband System for transcatheter repair of the mitral and tricuspid valves, toward the end of 2016. All these are expected to boost the top line in the quarter to be reported.

On the flip side, tough competition in the cardiac devices market and reimbursement issues continues to challenge the company. We also believe that unfavorable foreign currency will affect the company’s gross margin in to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Edwards Lifesciences this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Edwards Lifesciences has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.41 You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Edwards Lifesciences has a Zacks Rank #2, which increases the predictive power of ESP. However, an ESP of 0.00% makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few companies you may want to consider as our proven model shows that they have the right combination of elements to post an earnings beat this quarter:  

Becton, Dickinson and Company BDX has an Earnings ESP of +0.41% and a Zacks Rank #2. You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link_invidea...">the complete list of today’s Zacks #1 Rank stocks here.

Align Technology, Inc. ALGN has an Earnings ESP of +1.37% and a Zacks Rank #2.

Stryker Corporation SYK has an Earnings ESP of +0.66% and a Zacks Rank #2.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Stryker Corporation (SYK): Free Stock Analysis Report
 
Edwards Lifesciences Corporation (EW): Free Stock Analysis Report
 
Align Technology, Inc. (ALGN): Free Stock Analysis Report
 
Becton, Dickinson and Company (BDX): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research