Is Edwards Lifesciences (NYSE:EW) a Buy at Its Current Valuation?

The healthcare sector, long a magnet for investors seeking both stability and innovation, has seen its share of volatility in 2025. Edwards Lifesciences (EW), a leader in structural heart therapies, sits at an inflection point where its valuation dynamics-balancing growth potential against financial metrics-demand closer scrutiny. With a trailing price-to-earnings (P/E) ratio of 36.34 and a forward P/E of 30.18, EW trades at a premium to both its industry peers (average P/E of 28.9) and broader market benchmarks according to analysis. This raises a critical question: Is the stock overvalued given its slowing earnings growth, or does its robust product pipeline and market expansion justify the premium?

Valuation Metrics: A Premium for Growth, But at What Cost?

Edwards Lifesciences' valuation appears anchored to optimism about its structural heart disease franchise. The company's trailing P/E of 36.34 and a PEG ratio of 3.19 according to data suggest investors are paying a significant multiple for expected earnings growth. However, analyst projections paint a more nuanced picture. While revenue growth is forecast to remain moderate at 9–10% annually through 2027 according to forecasts, earnings growth is projected to decline sharply, with a compound annual growth rate (CAGR) of -24.08% over the same period according to projections. This divergence highlights a key tension: the market is pricing in growth, but earnings momentum is waning.

Comparative analysis with the U.S. Medical Equipment industry, which has a P/E of 28.9, underscores EW's premium valuation according to market data. This premium may reflect confidence in its TAVR (Transcatheter Aortic Valve Replacement) and TMTT (Transcatheter Mitral and Tricuspid Therapies) segments, which drove 14.7% revenue growth in Q3 2025. Yet, with a PEG ratio of 3.19-well above the 1.0 threshold typically signaling overvaluation-investors must ask whether the company's growth story justifies the current price.

Growth Catalysts: Innovation and Market Expansion

Edwards' long-term value proposition hinges on its ability to capitalize on unmet needs in structural heart disease. The company's 2025–2026 strategy emphasizes expanding its TAVR leadership, with the SAPIEN 3 Ultra RESILIA system driving global adoption. Additionally, the anticipated FDA approval of the SAPIEN M3 mitral valve replacement in early 2026 and the launch of a next-generation PASCAL system by year-end according to strategy could unlock new revenue streams.

Geographic expansion further bolsters growth prospects. Edwards plans to leverage updated U.S. TAVR guidelines and National Coverage Determination (NCD) changes in late 2026 to broaden access for asymptomatic aortic stenosis patients according to strategy. Meanwhile, its surgical portfolio, including the upcoming TRIFORMIS valve for tricuspid disease, positions the company to capture emerging markets according to strategy. These initiatives align with a long-term target of 10% annual sales growth and TMTT sales reaching $2 billion by 2030 according to projections.

Risk Profile: Balancing Beta and Credit Exposure

While EW's beta of 0.97 according to data suggests it is slightly less volatile than the S&P 500, its credit risk profile remains a concern. The company's probability of default has fluctuated sharply, rising to 27.03% as of November 2025, despite a B3 credit rating according to research. This volatility reflects both external market pressures and internal challenges, such as the projected decline in earnings growth. However, positive credit momentum-evidenced by a spread tightening of -0.423-indicates improving market sentiment according to analysis.

Financial leverage is relatively low, with a debt-to-equity ratio of 0.07 according to financial data, but the projected -24.08% earnings growth could strain margins. Analysts' price targets, ranging from a 15% to 34% upside according to forecasts, assume continued execution on R&D and market expansion. A failure to meet these milestones could exacerbate credit risk and widen valuation gaps.

The Verdict: A Buy for Growth, a Caution for Value

Edwards Lifesciences' valuation reflects a high-stakes bet on its ability to sustain growth in a competitive healthcare landscape. While its P/E and PEG ratios suggest overvaluation, the company's product pipeline and market expansion strategies offer compelling catalysts. For growth-oriented investors, the projected 9–10% revenue growth and $102/share price target by 2027 according to forecasts justify the premium. However, value investors may balk at the disconnect between earnings projections and valuation multiples.

The decision to buy EW ultimately depends on one's risk tolerance. The stock's beta of 0.97 according to data and low debt-to-equity ratio according to financial data provide some downside protection, but the credit risk profile and slowing earnings growth warrant caution. In a sector where innovation often outpaces fundamentals, Edwards Lifesciences remains a high-conviction play for those who believe its structural heart therapies will redefine market dynamics.