Recently, we reaffirmed our Neutral recommendation on Edwards Lifesciences (EW) with a target price of $91.00.
Edwards in one of the leading players in the field of heart valve therapy which accounted for 59% of total revenues in the fourth quarter of fiscal 2010. Contribution from this segment has increased steadily over the past; from 47% in 2007 to 54% in 2009.
The company has a strong product portfolio with many of them having been launched in the recent past. Increased acceptance of these products and greater market penetration would lead to higher sales in the forthcoming period.
In addition, the company is quite bullish about higher sales potential of the transcatheter heart valve (THV) portfolio. Cardiovascular disease is the most widespread disease that presently threatens humanity today. With increase in ageing population, the number of people with cardiovascular disease is likely to grow manifold.
The development of Sapien products holds immense potential for Edwards as it provides surgeons the option to eliminate the possibility of open heart procedures. The successful launch of Sapien XT in Europe led to an 87.2% rise in THV sales to $65.3 million during the quarter. Edwards is expecting greater contribution from THV in the forthcoming period.
Although Edwards has witnessed strong growth in the THV banking on the successful launch of Sapien products in Europe, the product is yet to receive approval in the US. However, Edwards is working towards getting the Sapien products approved in the US and Japan.The company expects to launch Sapien THV in the US during the fourth quarter of 2011 and expects sales of approximately $20-$25 million.
In addition to the Heart Valve Therapy segment, new product launches in the Critical Care segment are contributing to the growth. Although sales from the recently launched VolumeView and EV1000 were negligible during the quarter, these products have the potential to drive share gains going forward. The company expects to receive US approval for these products in the third quarter.
Moreover, the company is also making progress with respect to second generation product of its glucose monitoring program and expects to receive CE Mark approval by the end of 2011. Successful commercialization of these products should further contribute to the growth.
The market for THV is highly competitive with Medtronic (MDT) trying to get its CoreValve approved in the US, although it is approved in Europe. Moreover, Boston Scientific (BSX) will also emerge as a competitor in the Percutaneous Aortic Valves segment with its decision to acquire Sadra Medical.
BOSTON SCIENTIF (BSX): Free Stock Analysis Report
EDWARDS LIFESCI (EW): Free Stock Analysis Report
MEDTRONIC (MDT): Free Stock Analysis Report
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