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Can Edwards Lifesciences Corporation (EW)'s Medical Device Leader Bounce Back?


12/5/2012 9:13:20 AM

It seemed like nothing but blue skies ahead for Edwards Lifesciences (NYSE: EW ) back in early October. Shares were up more than 50% year-to-date and traded at 52-week highs. Then the sky fell. On Oct. 9, the company announced that it missed sales forecasts for the third quarter. The stock fell 18%, the largest one-day drop in 12 years. Edwards shares haven't been able to rebound much since that point. However, the company announced solid 2013 forecasts today. Shares climbed around 5% on the news. Can Edwards Lifesciences bounce back to its previous highs? Let's take a look. Springboards: Edwards projects sales growth of 13% to 16% and earnings growth of 25% in 2013. The company's Sapien transcatheter heart valve stands to be one of the biggest springboards to achieve this growth. Management expects global sales growth to be in the range of 30% to 45% for its transcatheter heart valve business. That rate would put total sales for the unit in the $710 million to $790 million range. The Intuity surgical heart valve system could be another catalyst for growth. Edwards plans to launch the product in Europe during 2013. The company projects sales of $800 to $840 million next year for its surgical heart valves, which reflects growth of 4% to 6% compared to 2012. Critical care monitoring systems should contribute to growth, although to a lesser extent than other products. Edwards projects that advanced monitoring systems, including two new products for non-invasive monitoring and glucose monitoring, will help grow critical care sales by 4% to 6% in 2013. This growth would mean total critical care sales of $560 million to $600 million. Bounce-busters: What could keep the stock from bouncing back? Several potential bounce-busters could emerge. Europe could continue to be problematic. Other medical device companies have already experienced headwinds resulting from the implementation of European austerity programs. For example, Intuitive Surgical (Nasdaq: ISRG ) cited European challenges as a factor in its disappointing third-quarter results. Edwards encountered similar problems last quarter. Europe represented nearly 31% of Edwards' total sales in the first nine months of 2012.

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