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Why Edwards Lifesciences Shares Rose 15.3% in April

By Adria Cimino - May 4, 2020 at 12:07PM

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Positive trial results, sales growth, and general market gains led the shares higher.

What happened

Edwards Lifesciences (EW -2.35%) shares rose 15.3% in April, according to data provided by S&P Global Market Intelligence.

The S&P 500 index rebounded 13% in April after entering a bear market a month earlier. Edwards Lifesciences, like many other companies across industries, fell in March as the coronavirus outbreak deepened in the U.S. With stay-at-home orders issued across the country, investors worried about the impact of the health crisis on businesses' earnings.

Three surgeons are at work in an operating room.

Image source: Getty Images.

The picture brightened for Edwards Lifesciences on March 29 with the announcement of excellent two-year results in a study comparing treatment with the company's Sapien 3 valve with surgery. The trial involved patients with severe symptomatic aortic stenosis at low risk of death from surgery. Transcatheter aortic valve replacement (TAVR) with the Sapien 3 continued to show favorable results for these patients compared with surgery.

Last month, Edwards Lifesciences reported growth in sales and earnings in the first quarter. Though that was good news, the company said the coronavirus outbreak dimmed the outlook for full-year sales and earnings per share.

So what

April was a month of mixed news. The Sapien 3 study was a bright spot, especially since TAVR is a strong area for the company. In the first quarter, TAVR sales rose 24%. More positive news: Sales increased 14% increase to $1.1 billion, and adjusted earnings per share grew 14%.

It's also clear that some of the share gains were simply part of a general market rebound. Edwards Lifesciences had fallen 33% from the start of the year to its low point in March.

Now what

More difficult times are on the horizon for Edwards Lifesciences as the impact of the coronavirus outbreak may be worse in the next earnings report. The outbreak resulted in the postponement of some procedures using the company's devices.

Edwards Lifesciences revised its sales guidance for the year to the range of $4 billion to $4.5 billion, down from $4.6 billion to $5 billion. And adjusted earnings per share may be between $4.75 to $5.25 instead of the earlier forecast of $6.15 to $6.40.

That said, the company predicts recovery in the third quarter that will lead to fourth-quarter results closer to earlier expectations. So investors may be optimistic about further share gains once the coronavirus impact has passed.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Edwards Lifesciences Corporation
$102.28 (-2.35%) $-2.46

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