Research

EW – Market expectations are for Uniform ROA to expand, but management appears concerned about growth, TAVR, and TMTT

January 7, 2021
  • Edwards Lifesciences Corporation (EW:USA) trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 48.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management appears concerned about their ability to sustain overall growth, TAVR adoption, and TMTT trials
  • Specifically, management may lack confidence in their ability to introduce the transcatheter aortic valve replacement (TAVR) therapy through their training program and sustain TAVR growth amidst the pandemic. Furthermore, they may have concerns about their conversations with the hospitals regarding TAVR, choppiness in growth, and continued FX headwinds. Management may also lack confidence in their ability to sustain their free cash flow and operating margins. Finally, they may be exaggerating their ability to return to pre-coronavirus levels for their transcatheter mitral and tricuspid therapies (TMTT) trials, and they may have concerns about the potential of TMTT