Edwards Posts Tepid Sapien Growth in Third Quarter, and We've Trimmed Our Fair Value Estimate

Edwards Lifesciences shares swooned after the firm posted tepid third-quarter results that were out of character, given that Edwards has consistently ridden the wave of double-digit growth in its transcatheter aortic valve replacement device largely since the product was launched in the United States more than a decade ago. We’ve lowered our fair value estimate to $86 per share from $93 after reducing our projections for TAVR growth through 2023, as we expect hospitals will not have completely resolved their labor challenges by then. On the other hand, we were pleased to see the firm receive Food and Drug Administration approval on its Pascal Precision device earlier than expected. Edwards’ ability to commercialize this differentiated technology underscores the intangible assets that have allowed the firm to dig a narrow moat.