Edwards Lifesciences Corp (NYSE:EW) Pays the Price for A Sales Miss


Wall Street was piqued that Edwards Lifesciences Corp (NYSE:EW), which creates solutions for structural heart disease, failed to meet revenue estimates in its third quarter.

Never mind that it managed to grow that revenue by 19.9% and as well delivered in-line EPS, shares still plunged a hefty 17.09% to close Tuesday at $94.25 on volume of 16.79 million.

Technically, the decline was foretold in the trading range between September 22 and October 10, when the stock made a multiple topping pattern on the daily chart, taking a series of shies at the $121.75 mark, but failing to get past it.

On October 14, Edwards closed below the 50-day average, and that should have been warning enough.

Yesterday’s plunge has taken Edwards below the 200-day line, and into bearish territory.

Edwards Lifesciences Corp (NYSE:EW) misses estimates by a paltry $11 million

A miss is a miss, said investors, and proceeded to punish the stock on Tuesday.

For the third quarter, the company reported EPS of $0.68, which was in line with estimates, and revenue of $739.4 million, which disappointed by 9.74 million.

However, investors should note that global Transcatheter Heart Valve Therapy (THVT) sales grew 38.5% while U.S. THVT sales were up 55.9% to $259.5 million. GAAP EPS grew 20.4% to $0.65, while adjusted EPS grew 25.9% to $0.68.

“2016 has been a remarkable year for our company,” said Michael A. Mussallem, chairman and CEO. “This performance reflects continued strong global adoption of our Edwards SAPIEN 3 valve platform, which remains on track to generate over $300 million more in sales than we originally expected for the year.”

Cash flow from operating activities for the quarter was $205.9 million but free cash flow was $157.8 million after accounting for capital spending of $48.1 million. Cash and cash equivalents were $1.2 billion at September 30, 2016, while total debt was $600.6 million.

Edwards raised its forecast for full year 2016 earnings to between $2.82 a share and $2.92 a share. For the fourth quarter, it expects adjusted earnings of between $0.67 and $0.77.

Analysts at Canaccord said the fall was a buying opportunity.


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