Edwards Lifesciences Corp. still has a long-term growth opportunity in its Sapien heart valves but the full realization of this will take longer than expected, according to a Citi analyst who downgraded shares of the stock.
Analyst Amit Bhalla lowered his rating on shares of the Irvine, Calif., company to "neutral" from "buy" and also reduced a target price on the stock to $95 from $101.
The Sapien valve is designed to replace diseased aortic valves. The FDA approved the valve in November for use in patients who were too sick to have open-heart surgery. Medicare then agreed to cover Sapien surgical procedures in May.
On Friday the FDA broadened the device's marketing approval to include patients who face high risks from open-heart surgery but are not too sick to endure the procedure.
Also on Friday, Edwards lowered its annual net income guidance, citing disappointing sales of the heart valve. The company had said earlier this month Sapien sales were being hurt by government austerity measures in Europe, Medicare coverage concerns in the U.S., and staffing problems like summer vacations.
Edwards now expects $530 million to $560 million in Sapien sales in 2012, down from its previous estimate of $550 million to $600 million.
Bhalla said in a Monday morning note that issues in Europe like the austerity measures and slow adoption of the device will likely linger for several quarters. That will keep the price of Edwards shares range bound in the low-to-mid $90s, he wrote.
Edwards shares fell 73 cents to $85.41 in premarket trading Monday. Its shares have fallen sharply from a 52-week high of $110.79 in early October.