{"id":54380,"date":"2023-08-29T10:06:11","date_gmt":"2023-08-29T14:06:11","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/will-edwards-lifesciences-stock-recover-to-its-pre-inflation-shock-highs-of-130\/"},"modified":"2023-08-29T10:06:14","modified_gmt":"2023-08-29T14:06:14","slug":"will-edwards-lifesciences-stock-recover-to-its-pre-inflation-shock-highs-of-130","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=54380","title":{"rendered":"Will Edwards Lifesciences Stock Recover To Its Pre-Inflation Shock Highs Of $130?"},"content":{"rendered":"
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Edwards Lifesciences<\/strong>
\n EW
\n <\/fbs-ticker> (NYSE: EW), a medical technology company specializing in artificial heart valves, currently trades at $76 per share, about 10% lower than the level seen in March 2021, and it can see higher levels over time. EW stock was trading at around $95 in early June 2022, just before the Fed started increasing rates, and is now 20% below that level, compared to 16% gains for the S&P 500 during this period. This underperformance of EW stock can be attributed to its slower-than-expected sales growth for its transcatheter aortic valve replacement business. Also, investors still have concerns about a potential recession despite a steady decline in the inflation rate in response to the Fed\u2019s aggressive rate hike plan.<\/p>\n

We note that EW stock has had a Sharpe Ratio of 0.5<\/strong> since early 2017, close to 0.6<\/strong> for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3<\/strong> for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.<\/p>\n

Returning to the pre-inflation shock level of about $130 means that EW stock will have to gain more than 70%<\/strong> from here, and we don\u2019t think this will materialize anytime soon. That said, there is upside potential from its current levels. EW stock is trading at 8x<\/strong> revenues, compared to levels of around 12x <\/strong>in 2019, before the pandemic. Our Edwards Lifesciences Valuation Ratios Comparison<\/strong> dashboard has more details.<\/p>\n

EW stock enjoyed a higher valuation multiple before the pandemic. However, with TAVR sales growth falling short of expectations, partly due to hospital staffing shortages seen in the recent past, a slight decline in the valuation multiple is justified. The company reported revenue per share of $9.25 for the last twelve months, and its last three-year average P\/S multiple is around 10x, implying a valuation of $92 and over 20% upside from its current levels.<\/p>\n

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Our detailed analysis of Edwards Lifesciences upside post-inflation shock<\/strong> captures trends in the company\u2019s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock\u2019s performance during the 2008 recession.<\/p>\n

2022 Inflation Shock<\/strong><\/p>\n

Timeline of Inflation Shock So Far:<\/p>\n