Friday, June 14, 2013

MassDevice: Edwards Lifesciences Comes Back Down To Earth ... Hard

Although I had been writing for some time that I thought Edwards Lifesciences (NYSE: EW) was significantly overvalued by the market, I don't take any particular pleasure in seeing the stock down almost one-quarter over the past year and year-to-date in 2013. Even so, it's a valuable reminder as to the risks of getting a little too bullish about first movers in fast-growing markets and the danger of the idea that “valuation doesn't matter”.

While the valuation has indeed come down significantly for Edwards, so too have the growth expectations. I do believe the market for transcatheter heart valves will exceed $4 billion in 2020 and that Edwards will remain the market leader. With free cash flow likely to grow at a low-teens rate and the stock slightly below fair value, these shares look interesting for more risk-tolerant investors.

Please read the full article here:

No comments: