Low Valuation Signal in Global Medical Player
Edwards Lifesciences Corp. (EW) develops, manufactures and markets products and technologies that are designed to treat advanced stage cardiovascular disease. In 2011, 64% of revenues were generated in markets outside the U.S.
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EW has a market capitalization of $7B. Their EPS has grown at approximately 21% / yr. for the last 5 yrs. Their shares currently trading at 22X earnings and they have about $500M of available cash.
Their Return on Capital (ROC) is 29.9% and they have an earnings yield of 4.5%. EW does not pay a dividend; therefore we recommend a ½ position
LOW VALUATION IN EDWARDS LIFESCIENCES AT $65.00 (EW, $USD 64.90) HALF POSITION
S&P rates EW at 4* with a target of $80.00 target. Based on the high valuations that have been seen in the last 2 years and assuming that the trend in earnings continues, the Purple Chips target is $110.00 in 12 to 18 months.
