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

Edwards Lifesciences Corporation (NYSE: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

Edwards Lifesciences Corporation Price and EPS Surprise | Edwards Lifesciences Corporation Quote

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 (NYSE:BDX) has an Earnings ESP of +0.41% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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

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