Why Edwards Lifesciences Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of cardiovascular products maker Edwards Lifesciences (NYSE: EW  ) jumped as much as 14% earlier today after the company reported its first-quarter results.

So what: Warning: This is one confusing report! Edwards Lifesciences reported a 14% increase in quarterly revenue to $459.2 million and a 2% increase in profits (excluding one-time costs and gains) to $0.53. This compared favorably to Wall Street's forecast for a profit of $0.48 with $450.2 million in sales.

But the wheels fell off the wagon when the company cautioned that transcatheter valve sales in the immediate future are expected to weaken and lowered its full-year outlook for sales of these products by $30 million. This weakness coerced Edwards to restate its guidance downward to the low end of its previous sales forecast of $1.95 billion to $2.05 billion, and EPS to a range of $2.58 to $2.68. Originally Edwards had expected EPS to range between $2.70 and $2.80 for the full year.

Now what: Confused yet? In short, Edwards beat in the first quarter, and its guidance for the second quarter based on EPS is ahead of the consensus figure, but it appears that a slowdown in sales will make for a weak second half of the year. I do like the medical devices sector a lot over the long term, as it's in a high-demand, high-growth field, but I, for the life of me, can't explain today's move higher, especially with the company cautioning that sales are weakening.

Craving more input? Start by adding Edwards Lifesciences to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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  • Report this Comment On April 25, 2012, at 2:07 PM, mrbluff wrote:

    The revised guidance is NOT due to "slowdown in sales". The ramp is due to increase upon further FDA approvals, the estimated approval date got pushed back from Q2 to Q3. Sales would still be increasing without this boost.

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