EW - Embedded Expectations Analysis - 2021 11 03
Edwards Lifesciences Corporation (EW:USA) trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 54.5x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about the TAVR therapy opportunity, their cash flow position, and the pace of the recovery of surgeries.Specifically, management be overstating the effectiveness and long-term growth opportunity of transcatheter aortic valve replacement (TAVR), the potential of SAPIEN 3 for patients at low surgical risk, and the benefit of gaining low surgical risk indications. Additionally, they may have concerns about the pace of the recovery of surgical aortic treatment rates in the U.S., their pipeline visibility, and COVID-related noise diminishing the quality of their ongoing study data. In addition, they may lack confidence in their ability to maintain their cash flow position, outperform sales expectations, and sustain gross margins. Finally, they may have concerns about the progress of vaccination outside the U.S., and they may lack confidence in their ability to sustain their market share.
Edwards Lifesciences is engaged in patient-focused medical for structural heart disease, as well as critical care and surgical monitoring. The company is a manufacturer of heart valve systems and repair products used to replace or repair a patient's diseased or defective heart valve. The company is also engaged in hemodynamic and noninvasive brain and tissue oxygenation monitoring systems used to measure a patient's cardiovascular function in the hospital setting. The company's products and technologies are categorized into four main areas: Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid Therapies, Surgical Structural Heart, and Critical Care.
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