Edward Lifesciences (EW) Q1 Earnings: A Surprise In Store?

Edward Lifesciences Corp. (NYSE:EW) is scheduled to report first-quarter 2017 earnings results after market close on Apr 25.

Last quarter, the company posted a positive earnings surprise of 5.63%. It is worth noting that Edward Lifesciences has outperformed the Zacks Consensus Estimate in two of the preceding four quarters, with an average positive earnings surprise of 5.45%. Let’s see how things are shaping up prior to this announcement.

Factors at Play

Edward Lifesciences posted a strong global sales performance in the last reported fourth quarter, primarily buoyed by solid Transcatheter Heart Valve sales. With continued strong therapy adoption across all geographies with notable strength in the U.S. and Japan, the company is expected to maintain this bullish trend in the first quarter of 2017 as well.

In this regard we note that, the company projected total sales between $760 million and $800 million and adjusted earnings per share of 79 cents to 89 cents for the first quarter.

We are encouraged by Edward Lifesciences’ initiative of strategic investment in research and development and winning of regulatory approvals for those products. Recently, Edwards Lifesciences received FDA clearance for its HemoSphere advanced monitoring platform.

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 the fourth quarter. All these are expected to boost the top line in the quarter to be reported.

On the flip side, for the past three months, the company’s share price has been trading below the Zacks categorized Medical - Instruments industry. The stock gained 1.8%, lower than the 5.0% gain of the broader industry.

Additionally, stiff competition in the cardiac devices market and reimbursement issues continues to plague the stock. We are also concerned about unfavorable foreign currency that has been affecting the company’s gross margin over the past few quarters. Management expects this problem to linger in the forthcoming quarter as well.

Earnings Whispers

Our proven model does not conclusively show that Edward Lifesciences is likely to beat estimates this quarter. That 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. However, that is not the case here, as you will see below.

Zacks ESP: Edward Lifesciences has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 82 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Edward Lifesciences’ Zacks Rank #3 increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

Here are some companies you may consider as our model shows that they have the right combination of elements to post an earnings beat in the upcoming quarter:

Galectin Therapautics, Inc. (NASDAQ:GALT) has an Earnings ESP of +13.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hill-Rom Holdings Inc (NYSE:HRC) has an Earnings ESP of +1.27% and a Zacks Rank #2.

Syros Pharmaceuticals, Inc. (NASDAQ:SYRS) has an Earnings ESP of +3.85% and a Zacks Rank #2.

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