What's In Store For Edwards Lifesciences' (EW) Q4 Earnings?

Edwards Lifesciences Corporation (NYSE:EW) is slated to report fourth-quarter 2018 results, after market close on Jan 31. Last quarter, the company’s earnings beat the Zacks Consensus Estimate by 5.9%. Moreover, Edwards Lifesciences delivered positive earnings surprises in the trailing four quarters, the average beat being 7.8%. Let's see how things are shaping up prior to this announcement.

Key Catalyst

Similar to the prior quarter, Edwards Lifesciences is expected to gain from strength in Critical Care product group. The segment has been seeing solid growth across all product categories.

Edwards Lifesciences is also set to keep gaining from Critical Care technologies with the rollout of HemoSphere monitoring platform supported by new group purchasing organization contracts in the United States.

Last December, the company announced that the HemoSphere advanced hemodynamic monitoring platform received FDA approval for the Acumen suite of intelligent decision-support solutions.

Edwards Lifesciences Corporation Price and EPS Surprise

TheZacks Consensus Estimate for Critical Care product group sales of $171 million shows an increase of 4.3% from the year-ago quarter.

We are also upbeat about the Surgical Structural Heart product group which should continue to see solid uptake of its new premium aortic valves along with solid aortic unit volume. Further, the company has initiated the launch of its INSPIRIS RESILIA aortic valve in Japan which is likely to contribute to the top line in the to-be-reported quarter.

Moreover, buoyed by continued adoption of INTUITY Elite valve system, management expects it to continue to drive the top line in the fourth quarter.

This apart, INSPIRIS RESILIA aortic valve is witnessing encouraging demand in the United States since its rollout initiated last January.

TheZacks Consensus Estimate for Surgical Structural Heart product sales of $208 million reflects a rise of 1.5% from the year-ago quarter.

Here are a few other factors that might influence Edwards Lifesciences’ fourth-quarter results:

Edwards Lifesciences has been seeing consistent performance by the Transcatheter Heart Valve Therapy (THVT) segment. However, during the third-quarter earnings announcement, Edwards Lifesciences noted that it is expecting the 2018 underlying sales growth in THVT to remain sluggish, at around 12.5% because of limited contribution from Cardioband Tricuspid Annular Reduction System and a newly-revised controlled rollout strategy for SAPIEN 3 Ultra.

Notably, in transcatheter tricuspid repair, constrained by supply, clinicians are treating a limited number of patients in Europe with Cardioband. With this, in the third quarter, sales were limited to $1 million in both mitral and tricuspid programs. Management expects this trend to continue in the fourth quarter as well.

Meanwhile, last November, Edwards Lifesciences received CE mark for the SAPIEN 3 Ultra system for transcatheter aortic valve replacement in severe, symptomatic aortic stenosis patients.

Accordingly, the Zacks Consensus Estimate for total THV sales of $594 million shows an increase of 10% from the year-ago quarter.

Overall, the company projects sales between $950 million and $1 billion in the to-be-reported quarter. Our consensus estimate for fourth-quarter total revenues is pegged at $973.7 million, showing a rise of 9.6% from the prior-year quarter.

What Our Model Suggests

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Edwards Lifesciences has a Zacks Rank #3 and an Earnings ESP of +0.86%, a combination that suggests a beat for the company this earnings season.

The Zacks Consensus Estimate for earnings of $1.17 reflects a 24.5% rise on a year-over-year basis.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering as these also have the right combination of elements to post an earnings beat in the to-be-reported quarter.

PerkinElmer (NYSE:PKI) has an Earnings ESP of +0.77% and a Zacks Rank #3.

Illumina, Inc. (NASDAQ:ILMN) has an Earnings ESP of +0.32% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DexCom (NASDAQ:DXCM) has an Earnings ESP of +8.93% and a Zacks Rank #2.

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