Edwards Lifesciences Reports Strong Q4 Growth, Confirming Base Case but Valuation Remains Stretched

What happened

Edwards Lifesciences reported fourth-quarter 2025 sales of $1.57 billion, a 13.3% year-over-year increase, driven by robust performance in its core segments. TAVR sales grew 12.0% to $1.16 billion, indicating sustained demand and leadership in transcatheter aortic valve replacement. TMTT sales surged over 40% to $156 million, showcasing rapid adoption of mitral and tricuspid therapies and aligning with the company's growth targets. These results reinforce the DeepValue report's base case of 6-8% TAVR growth and TMTT scaling toward $740-780 million by 2026. However, at a share price around $84 and a P/E of 28-29x 2026 EPS, the stock is fully valued, leaving minimal buffer for execution missteps or regulatory headwinds.

Implication

The Q4 results validate Edwards' ability to execute on its growth strategy, particularly in TAVR and TMTT, which should bolster investor confidence in near-term earnings. However, with the stock trading at a premium multiple, any deviation from guided growth or adverse regulatory events could lead to significant downside, as highlighted in the DeepValue report's bear case. Investors should monitor quarterly TAVR growth for signs of deceleration below 6-8% and TMTT progress against the $740-780 million 2026 target to assess sustainability. Regulatory risks, such as potential Class I recalls or antitrust constraints following the blocked JenaValve deal, add asymmetry to the investment case. Given the limited valuation cushion, a wait-for-better-entry stance remains prudent unless shares dip below $75 while growth metrics hold firm.

Thesis delta

The Q4 results do not shift the investment thesis, as they are consistent with the growth assumptions embedded in the DeepValue report's base case. They reinforce that Edwards is on track to meet its 2026 guidance, but the high valuation and regulatory overhangs continue to justify a neutral rating. Investors should await a more attractive entry point or clearer evidence of risk mitigation before increasing exposure.