Edwards Lifesciences: A Heart-Felt Breakout

10/15/2019 5:00 am EST

Focus: HEALTHCARE

Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Edwards Lifesciences (EW), based in Irvine, Ca., makes heart valve systems and repair products for a patient's diseased or defective heart valve, notes breakout stock specialist Leo Fasciocco, editor of Ticker Tape Digest.

EW provides medical instruments for patient with heart disease and in need of critical care monitoring. Annual revenues are $3.7 billion.

Its products are categorized into three areas: Transcatheter Heart Valve Therapy, Surgical Heart Valve Therapy and Critical Care. The company also develops hemodynamic monitoring systems used to measure a patient's cardiovascular function in a hospital.  

The stocks 12-month performance chart shows the stock up 50% versus a 1% gain for the stock market. The long-term chart shows the stock climbing from $31 in 2013 to a peak near $121 by late 2016.

The stock went into a basing pattern and then emerged in late 2017. It has since surged higher and recently made a new high. The shares have since put down a tight flat base. The technical setup is ideal and the stock's momentum indicator is strongly bullish.

This year, analysts are forecasting a 14% increase in net to $5.34 a share from  the $4.70 the year before. The stock sells with a price-earnings ratio of 41. That is high for the growth rate.

Quarterly earnings growth will show a modest acceleration. Currently, 12 analysts follow the stock. The highest estimate is at $1.26 a share.

Net for the third quarter should be up 14% to $1.22 a share from the $1.07 the prior year. For the fourth quarter, the Street sees a 21% leap in net to $1.41 a share from the $1.17 the prior year. Looking out to 2020, the Street projects an 11% rise in net to $5.92 a share from the anticipated $5.34 this year.

We are targeting the stock for a move to $270 within the next few months, or sooner. A protective stop can be placed near $220. We consider the stock to be suitable for aggressive bulls.

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