Edwards Lifesciences Weathers Omicron Pressure in Fourth Quarter; No Change to Our FVE

Despite the drag of the omicron variant and falling short of consensus expectations, Edwards Lifesciences finished off the full year very close to our projections, and we’re leaving our fair value estimate unchanged for now. In terms of revenue, transcatheter aortic valve sales hit our projection on the nose, while surgical valve, transcatheter mitral, and critical care clocked in just over our estimates, but this wasn’t enough to materially move our valuation. Fourth-quarter cost containment generally met our expectations, with gross margin slightly outpacing our estimates, which was offset by sales and marketing expenses that ran ahead of our projections. Though the path of the pandemic remains volatile, we see little to suggest the firm’s narrow economic moat is under pressure. Importantly, the firm has continued to invest in product development and clinical studies to support innovation in the pipeline, which we believe will pay off over the long term.