Edwards Lifesciences Corp. (EW), the biggest-maker of aortic heart valves implanted with a catheter, plunged the most in a dozen years after the company cut its 2013 forecast on slower-than-anticipated sales.
Edwards fell 22 percent to $64.60 at the close in New York, its biggest single-day decline since October 2000. The Irvine, California-based company had gained 13 percent in the 12 months through yesterday.
Earnings excluding one-time items may be $3 to $3.10 a share this year, Edwards said in a statement yesterday. The company had projected full-year profit of as much as $3.31 in February. Sales of its traditional surgical heart valves and critical care products fell in the first quarter, while a boost from October’s expanded U.S. approval for Sapien was short of expectations.
“Sometimes, the adage is simple: you can’t have a high multiple stock miss, and it is worse if management guides down,” said Joanne Wuensch, a New York-based analyst at BMO Capital Markets, in a note to clients today. “While we expect the stock to take a beating here, we need signs of consistent uptake of Sapien in the U.S. and outside the U.S. stabilization for the stock to retake its upward trajectory.”
Edwards’s competitor for the less-invasive heart valves, Medtronic Inc. (MDT), may have siphoned some sales from the Sapien device as it tests CoreValve in the U.S., said Jason McGorman, a Bloomberg Industries analyst in Princeton, New Jersey. The U.S. sales for Sapien, which is implanted using a catheter through an artery or directly into the heart, were lower than expected and Edwards cut its full-year guidance by $40 million, he said.
“As global sales this quarter across product lines were below our expectations, we are lowering our 2013 guidance primarily to reflect a slower start to the year and an updated foreign exchange impact,” Chief Executive Officer Michael Mussallem said in the statement.
First-quarter earnings excluding one-time items were 72 cents a share, less than the average of 76 cents from 23 analysts’ estimates compiled by Bloomberg. Revenue increased 8.2 percent to $496.7 million, missing the consensus analysts’ estimate of $518.9 million.
U.S. sales for the Sapien valve were $83 million for the quarter, missing expectations after 20 medical centers slated to learn how to implant the devices postponed training. Mussallem said the U.S. opportunity for the transcatheter aortic valve replacement, or TAVR, remains unchanged, though it may take longer to reach it.
“Edward’s initial 2013 guidance clearly proved to be overly aggressive on U.S. TAVR sales as capacity constraints and the complexities of bringing a 20+ person team up the learning curve clearly tempered the adoption curve more than expected,” said Danielle Antalffy, an analyst with Leerink Swann & Co. in New York.
Edwards’ studies of Sapien and next-generation valves continue to generate positive results and the company is making good progress on its pipeline of new products that will strengthen its leadership position, Mussallem said.
Net income increased to $144.9 million, or $1.24 a share, from $65.1 million, or 55 cents, a year earlier, Edwards said in its statement. The quarterly income included $92 million from an initial payment from Medtronic related to patent litigation and a research-and-development tax credit, the company said.
Sales fell 2.7 percent to $198.1 million for traditional surgical heart valves and dropped 3.9 percent to $128.9 million for critical care products as the company reduced its inventory held by distributors in China, Edwards said.
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