Deutsche Bank Maintains Hold On Edwards Lifesciences

According to Deutsche Bank, Edwards Lifesciences EW rating is maintained at Hold. Deutsche Bank reported that Cohort A met its primary endpoint of non-inferiority to surgical valve replacement. “However, at the current valuation we believed this was already fully priced in. There was a higher and unexplained stroke rate that seems to be more of a concern amongst investors than clinicians. We believe the data, when combined with Cohort B, warrants approval of the transfemoral system. Transapical data, while numerically better than what has been reported in Europe, was underpowered and may be something the FDA asks for more data on. We have not changed our earnings estimates as the data was as expected. Our price target $80 applies a PE of 30x our 2012E EPS of $2.69, which is calculated using the MedTech historical PEG (1.4x) and our est trend EPS CAGR for EW (~21%). We estimate the base EW business is worth about $30. Downside risks include delays in approval or CMS/FDA restrictions that result in a smaller market potential, and competitive launches (e.g. MDT, STJ). Upside risk includes better than expected Cohort A data, less restrictive FDA labeling, favorable THV patent litigation, and delays in competitive product launches.” Edwards Lifesciences closed on Friday at $86.07.