Edwards Lifesciences Corp (EW) — This health care equipment company specializes in products and technologies to treat cardiovascular diseases.
On Tuesday after the close, EW stock jumped 8.3% following the release of the company’s better-than-expected fourth-quarter earnings report. Earnings rose 28% year over year in Q4 to 64 cents a share on an 8.6% revenue increase to $671.1 million. This surpassed analysts’ expectations of 60 cents a share on $651.3 million in sales.
The company also raised its outlook for the full year. Management forecasted 2016 earnings between $2.57 and $2.67 per share on revenue of $2.6 billion to $2.9 billion. Analysts’ were expecting EPS of $2.40 and revenue of $2.7 billion.
Following the upbeat earnings and guidance, a number of analysts followed suit by raising their EPS estimates and price targets for the stock. For instance, Credit Suisse boosted its 2016 estimate by 5% to $2.61. Its analysts rate EW stock “Outperform” with an $88 price target.
Investors’ positive reaction to the earnings report resulted in an opening gap, which broke EW stock from a near-term downtrend within a long-term bull channel. The channel’s support line is at about $73.50, and the resistance line is near $85.
Very high volume accompanied the gap, which was preceded by two buy signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR). The gap was also supported by a strong MACD buy signal.
Buy EW stock at its current price near $83 with a trading target of $98 within one month for a potential return of 18%.
