Edwards Lifesciences

2014 change: +96%
Market Cap: $14.3 billion

Major holders as of Sept. 30, 2014: Vanguard Group (7.84%), Growth Fund of America (5.73%), Capital World Investors (5.59%), Generation Investment Management (5.2%), FMR (4.64%), Vanguard Specialized-Health Care Fund (4.6%), State Street (4.38%), Wellington Management (4.05%), Amcap Fund (3.71%)

Why is it up? The succinct answer is strong sales of the Sapien transcatheter aortic valve replacement. In Q3 2014, global sales of the TAVR for patients who are too frail to receive open heart surgery rose 44%, including sales of $126 million in the U.S.

Investors were also pleased by the $750 million upfront payment Edwards ($EW) received over the summer from Medtronic ($MDT) to settle a patent dispute over TAVR technology. Wall Street pushed the stock up 10% in approval. Under the agreement, Edwards will receive annual royalty payments of $40 million to $60 million from Medtronic going forward.

Investors are also banking on continued growth of the flagship product. In December, CEO Michael Mussallem said the company anticipates a 15% to 25% sales growth rate for Sapien, with estimated sales of $1.0 billion to $1.1 billion.

What comes next? Edwards was the pioneer in TAVR but now faces increasing competition. The settlement with Medtronic means the company no longer has a monopoly in the U.S. Meanwhile, during the latest earnings call, the company reported a modest pickup in the penetration of European competitors, which include Medtronic's CoreValve as well as Boston Scientific's ($BSX) Lotus.

Edwards hopes to stay ahead of the pack with the upgraded Sapien 3, which is available in Europe, and planned to launch in 2016 in the U.S., where the company is currently focusing on upgrading hospitals to the second-generation Sapien XT. (The U.S. is about one generation behind Europe in TAVR devices.)

And at the JP Morgan Healthcare Conference, Mussallem reminded the audience not to forget about Edwards' other cardiology business lines. He expects continued growth in the mid-single digits for the company's surgical valves due to growth in emerging markets and the aging populations in developed countries around the world.

EW Chart

EW data by YCharts

For more:
Edwards looks to TAVR to convince Wall Street it can go higher after doubling in 2014
Edwards profit up 23%, but increased TAVR competition looming
Medtronic and Edwards Lifesciences settle the score in ongoing patent feud

-- Varun Saxena (email | Twitter)

Edwards Lifesciences
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