Edwards Lifesciences Corp. (NYSE: EW) hosted their annual investor conference on December 8th. The medical device company announced a $50 million investment in CardioKinetix’s new parachute heart valve therapy. In addition, Edwards Lifesciences reaffirmed fiscal year 2014 estimates for diluted earnings per share of $3.33 to $3.39. The estimated 2015 adjusted earnings per share is $3.90 to $4.10. Edwards Lifesciences estimated its 2015 adjusted earnings per share to be $3.90 to $4.10.
The $50 million financing led by Edward Lifesciences will give CardioKinetix the means to complete a trial of the Parachute® Ventricular Partitioning Device. Parachute therapy is a minimally invasive procedure used to treat heart failure but it must first be approved by the FDA.
Edwards Lifesciences stated the transaction “increases Edwards’ existing minority interest in CardioKinetix and provides an option to purchase the remaining outstanding shares for a future payment, plus additional milestone payments based on future regulatory and reimbursement approvals.”
Maria Sainz, CEO of CardioKinetix, stated that the Parachute therapy has treated more than 300 patients and undergone four clinical trials. She acknowledged that “Heart failure remains a huge global clinical and economic challenge for healthcare systems, and Parachute holds the promise to bring needed improvements in mortality, quality of life, and care efficiency to clinical providers.”
Other highlights of investor conference include improvements in surgical hearth valve technologies and minimally invasive TAVR therapies, or transcatheter aortic valve replacement. Edwards Lifesciences also announced developments to critical care of hemodynamic monitoring and progress in their transcatheter mitral valve program.
On December 9th, analyst Bob Hopkins of Bank of America Merril Lynch reiterated a Neutral rating on Edwards Lifesciences and raised the price target from $120 to $140. Hopkins rated the stock in light of their annual investor conference. He noted, “All product and milestone updates were incrementally positive and 2015 guidance seemed reasonable.” Hopkins announced new earnings per share of 2014-2016 of $3.38, $.4.02, and $4.51. He continued, “Our PO goes to $140 which assumes EW can trade at 30x our 2016 cash EPS estimate. Nearer term margin upside or real progress with Mitral would be needed to justify significant upside above $140 in our view. We do see a number of areas where 2015 guidance could be conservative including buyback guidance… guidance on the MDT royalty… and GMs.” Hopkins concluded, “EW provided little visibility on long term margins but indicated that leveraging the P&L is a key priority.”
Hopkins has a 73% overall success rate recommending stocks with an average return of +12.5% per recommendation.
Separately on December 10th, analyst Ben Andrew from William Blair maintained an Outperform rating on Edwards Lifesciences but did not provide a price target. Andrew explained, “The shares trade at 32.8 times our new $4.03 EPS estimate (up 19%). We rate the shares Outperform as the pipeline across the three major business segments remains robust, with the opportunity for Edwards to continue its market leading positions.” He noted that Edwards Lifesciences’ management “continues to believe in solid underlying market growth for transcatheter aortic valve replacement (TAVR), indicating it expects the market size to double by 2019 to over $3 billion through different applications, product innovation, and further indications.”
Andrew has a 75% overall success rate recommending stocks with an average return of +13.2% per recommendation.
The overall analyst consensus for EW is Moderate Buy.