Edwards Lifesciences (EW) Valtech Deal a 'Headscratcher' - Northland Capital Markets

November 28, 2016 12:33 PM EST
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Price: $96.88 -0.26%

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Northland Capital Markets analyst Suraj Kalia weighed in on Edwards Lifesciences (NYSE: EW) announced this morning the acquisition of Israel based Valtech Cardio, a transcatheter mitral repair company. The analyst called the deal a "headscratcher."

"If the name Valtech sounds familiar, it should, cause Heartware tried to acquire it in 2015 (the deal though, fell apart). Edwards acquiring Valtech for $700M, in our view, is a headscratcher." Kalia commented. "While we understand the desire to branch out into complementary technologies in the mitral space, we harbor fundamental doubts about Valtech, especially at this price."

Kalia added, "The biggest problem with mitral repair remains lack of durability. Recently announced 24-month data on Valtech's Cardioband annuloplasty system from the CE study had headline data showing 92% of patients with MR ≤2+ grade @ 24-months. The problem with this is only 12 patients out of the original 61 were followed to 24-mths. Procedural success in the study was only 86% (defined as only an MR grade reduction of 1+). At 24-months, the 6MWT was not statistically significant, while the MLHFQ and NYHA changes were significant (on a much smaller sample size). A-P diameter reduced by 30%."

The firm maintained an Outperform rating and price target of $105 on EW.

For an analyst ratings summary and ratings history on Edwards Lifesciences click here. For more ratings news on Edwards Lifesciences click here.

Shares of Edwards Lifesciences closed at $85.80 yesterday.

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