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Goldman Sachs (GS) Raises PT On Edwards Lifesciences (EW) To $97, Reiterates 'CL-Buy'

 May 02, 2012 10:18 AM

(By Balachander) Goldman Sachs (GS) raised its price target on shares of Edwards Lifesciences Corp. (NYSE:EW) to $97 from $90, while reiterating its "Conviction List-Buy" rating on the stock.

On May 1, the Centers for Medicare and Medicaid Services (CMS) released the final Medicare National Coverage Determination (NCD) document for transcatheter aortic valve replacement (TAVR) procedures.

"After a detailed review of the CMS documents as well as physician and industry participant conversations, we remain confident in our launch assumptions for the company's SAPIEN TAVR in the US, and maintain our estimates," GS analyst David Roman wrote.

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"Looking specifically at the NCD, we think the CMS requirements for centers and physicians to receive TAVR reimbursement appear achievable for about one third of cardiac surgery centers in the US, or roughly 400 centers (this supports our 2015E above-consensus numbers at current per center utilization rates)," the analyst said.

Now that the guidelines have been issued, Roman thinks the ramp in center opening should accelerate (Edwards had trained 60 centers as of March 31, 2012). "Feedback from the American College of Cardiology meeting and our March physician survey indicates that once physicians are trained, procedure volumes ramp at a steadily increasing rate," the analyst said.

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Beyond the facility requirements, CMS removed a potentially arduous component of the proposed NCD related to clinical trial design that could have reduced Edwards' annual EPS by $0.25 (9 percent - 10 percent of 2012E), by Roman's estimates.

Irvine, California-based Edwards Lifesciences provides heart valve therapy products, including tissue heart valves and repair products. The company also offers critical care products comprising hemodynamic monitoring systems.

The stock, which has been trading in the 52-week range between $61.59 and $91.50, added 80 cents to trade at $85.58.

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