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Edwards Stock Dives As Full-Year Earnings Guidance Comes In Light

The pandemic continued to dog Edwards Lifesciences and Boston Scientific in the third quarter, the companies said Wednesday — leading EW stock and BSX stock to dive.




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Late Wednesday, Edwards Lifesciences retained its 2021 guidance. That lagged more bullish forecasts. Earlier in the day, Boston Scientific offered what one analyst called a “conservative” look at its fourth-quarter expectations.

Both stocks ended the regular session in the red. In after-hours trading on the stock market today, EW stock tumbled 5.2% near 110. BSX stock dropped 1.3% during the regular session, to 43.73. BSX shares were up a fraction after the close.

EW Stock: Sales Come Up Short

For its quarter, Edwards Lifesciences reported adjusted profit of 54 cents per share on $1.31 billion in sales. Earnings inched ahead 3.8% and topped EW stock analyst estimates by a penny. Sales grew 15% but narrowly missed expectations for $1.32 billion. On an underlying basis, sales climbed 14%.

The company’s biggest segment is transcatheter aortic valve replacements, or TAVR. This nonsurgical method of replacing a faulty heart valve generated $858 million in third-quarter sales. TAVR revenue increased 15% on a strict as-reported basis.

But the delta variant had an impact, Edwards said in a news release.

“We believe some procedures were unfortunately deferred in the third quarter, and expect many of these patients who deferred treatment will be treated in the future,” Chief Executive Michael Mussallem said in a written statement. “We continue to expect total company sales growth to be in the high teens for the full year.”

Edwards also sells devices to repair mitral and tricuspid heart valves. Those devices generated $22 million in third-quarter sales. The company expects that to be a $3 billion business by 2025. Its surgical heart valve replacements and critical care business brought in $217 million, up 7%.

Guidance Comes In Light

But Edwards kept its full-year outlook for adjusted profit of $2.07-$2.27 per share and $5.2 billion-$5.4 billion in sales, slamming EW stock. At the midpoints, that lagged EW stock analysts’ call for $2.27 a share and $5.33 billion, respectively.

“We remain confident that the innovative therapies resulting from our investments will benefit a broad group of patients suffering from structural heart disease and continue to drive strong organic growth,” Mussallem said.

Edwards stock is working on a buy point at 123.37 out of a flat base, according to MarketSmith.com. But Monday’s high of 118.07 could also provide another trigger as EW stock moves above its 50-day line.

BSX Stock Joins EW Stock In A Dip

Earlier in the day, Boston Scientific reported adjusted profit of 41 cents per share and $2.93 billion in sales. Earnings increased nearly 11%, but ended up a penny short. Sales grew 10.3% on a strict as-reported basis, but just missed views for $2.96 billion, according to FactSet. Organically, sales advanced 10.6%.

Like Edwards’ top executive, Boston Scientific CEO Michael Mahoney said the delta variant had a part to play in the third quarter. The quarter “was impacted by Covid more than we anticipated as the delta variant surged globally and some elective procedures were deferred,” Mahoney said on the company’s earnings conference call.

Evercore ISI analyst Vijay Kumar said delta impacted every segment. The pain was particularly acute for the neuromodulation segment. Neuromodulation is a method of using electrical pulses to control pain. Sales increased 2.4% on a reported basis to $221 million.

That was better than Abbott Laboratories (ABT), however. Abbott reported a nearly 8% dip in sales for its neuromodulation unit.

Still, BSX stock joined EW stock, ending the regular session in the red.

Analyst Calls Guidance Conservative

For the year, the company expects to earn $1.60-$1.62 per share. Boston Scientific also called for sales to increase 19%-20% on a reported basis and 18%-19% organically. The earnings outlook was in line with BSX stock analysts’ call for $1.61. Analysts also projected $11.98 billion in sales, up 20.8%.

Kumar says the fourth-quarter guidance is likely conservative as Boston Scientific attempts to curb expectations for its Watchman, a heart repair device. The company expects earnings of 43-45 cents per share and for sales to rise 13%-17% on a reported basis. Organically, sales are expected to rise 12%-16%.

Abbott is now entering that market. But Kumar expects Boston Scientific to maintain 25%-30% growth for its Watchman device over the medium term.

“Historically, the entry of a second player in underpenetrated markets has been a catalyst for market acceleration,” Kumar said in a report. He compared Watchman’s market to heart-valve repair devices and body-worn glucose monitors. “We think this playbook is a good analogy and are not concerned about Boston Scientific’s growth slowing.”

He kept his outperform rating and 52 price target on BSX stock.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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