Edwards Lifesciences Corporation (NYSE: EW) provides
products and technologies designed to treat cardiovascular diseases. Offerings include tissue heart valves, valve repair products, heart monitoring equipment, central venous access devices and cardiac surgery system products. The company sells its goods through a direct sales force and independent distributors worldwide. Formerly part of Baxter International (NYSE: BAX), the firm was a year 2000 spin-off.
Edwards surprised the Street late last month, when it reported Q1 EPS of 56 cents and revenues of $296.8 million. Analysts had been expecting 49 cents and $284.4 million. In discussing the results, the CEO noted the success of new products and strong international sales growth. Management also guided Q2 EPS to 62-66 cents (58 cent consensus), FY08 EPS to $2.45-$2.53 ($2.35 consensus) and FY08 revenues to $1.210-$1.260 billion ($1.18B consensus).
The stock
price popped on the news and has since been consolidating the gain in a bullish "flag" pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the shares with two "strong buys", three "buys", ten "holds" and two "sells". Analysts expect a 17% growth rate, through the next year. The EW Price to Sales ratio (2.76), Price to Book ratio (3.96) and Price to Free Cash Flow ratio (21.24) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $41.69 and $57.74. A stop-loss of $48.90 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in either of the stocks mentioned above.
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