By Sam Boughedda
Bernstein analysts double downgraded Edwards Lifesciences (NYSE:EW) to Underperform from Outperform on Tuesday, cutting the firm's price target on the stock to $66 from $95 per share.
The analysts said in a research note to clients that Edwards Lifesciences is a high-quality company and a leading medtech innovator, with investors having come to expect mid-teens revenue growth. However, they conceded that organic growth has slowed to 5.5% over the past two quarters, and the stock still trades at 30x-31x.
"We believe U.S. TAVR market growth could remain sluggish for a while, and worse, we believe Medtronic (NYSE:MDT) will take share from Edwards," wrote the analysts.
"Hospital staffing constraints are slowly improving, but EW's particular problems may take longer to fix, and COVID-related excess mortality may have depleted the TAM for TAVR by as much as 15%," the analysts added.
Altogether, Bernstein forecasts less than 7% organic growth for EW in 2023, declaring that "there are no big TAVR or TMTT catalysts that can save the stock in the near term."
In addition, the analysts feel that the company's guidance for 2023 seems optimistic, and the CEO transition adds a bit of uncertainty.
On Monday, Piper Sandler downgraded EW to Neutral, telling investors that the decision to cut the stock was based on factors including the U.S. TAVR market becoming increasingly competitive and the firm seeing a less-than-ideal stock set-up behind a lofty FY2023 guidance.