Evercore 'Not Overly Surprised' by Edwards' (EW) Acquisition of Valtech's Cardioband; Affirms at 'Hold'
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Evercore ISI affirms Edwards Lifesciences (NYSE: EW) witha Hold rating and $105 price target after the company announced that it has agreed to acquire Valtech Cardio Ltd., a privately held company based in Israel and developer of the Cardioband System for transcatheter repair of the mitral and tricuspid valves.
The firm commented on Monday:
- We are not overly surprised at EW's acquisition of Valtech's Cardioband given that MR (mitral regurgitation) is a complex disease state possibly requiring multiple approaches to therapy. Cardioband aims to improve the functional status of MR (without treating the underlying disease mechanism) and will add to EW's mitral valve replacement approaches (CardiaQ).
- That said, while this could stir the repair vs. replacement debate, we note that the complex anatomy of mitral valve makes a multi-pronged approach to therapy prudent
- On the clinical side, while device failure rate is something that needs to be addressed, the 12 month and 24 month data on functional improvement (evaluated on the MR severity grading) is a positive and should allay concerns on whether the benefit is durable (some had questioned durability of benefit given that Cardioband was an incomplete ring)
- In conjunction, EW also announced the authorization of a new $1Bn buyback program, which equates to about 5% of current shares outstanding. This should provide some comfort to investors, as EW signals that they see value dislocation post recent slump in shares.
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