Edwards Lifesciences climbs after Boston Scientific recalls rival devices

Shares of Edward Lifesciences (EW) were higher in afternoon trading after peer Boston Scientific (BSX) announced a recall of its Lotus Valve line of heart valve devices following reports of device malfunctions. BOSTON SCIENTIFIC RECALL: In a regulatory filing this morning, Boston Scientific said it will recall its Lotus range of heart devices due to reports of "premature release of a pin connecting the Lotus Valve to the delivery system." Boston Scientific said it believes the malfunction is caused by "excess tension in the pin mechanism introduced during the manufacturing process," as with the prior announced suspension of the Lotus Edge Valve System device. The Lotus devices are expected to return to the European market and other regions in the fourth quarter, Boston Scientific said. In October, Boston Scientific said it had suspended implants of the Lotus Edge device over similar concerns, and commented at January's JPMorgan Healthcare Conference that the fix required a combination of "minor process and specification changes" rather than any meaningful product redesigns. Boston Scientific's Lotus technology is used in TAVR, a minimally invasive surgical procedure performed on the heart, and competes with offerings from Edwards Lifesciences and Medtronic (MDT). In addition to the recall, Boston Scientific said this morning that it now anticipates filing the U.S. PMA submission for the Lotus Edge Valve System in the fourth quarter, with a planned U.S. launch set for mid-2018. The company previously expected to file the PMA in May. EDWARDS, MEDTRONIC SEEN AS 'CLEAR BENEFICIARIES': In a note to clients following Boston Scientific's recall, SunTrust analyst Bruce Nudell said Edwards and Medtronic are the "clear beneficiaries," adding that both of these companies stand to gain $100M each over the next year and a half. Nudell notes that this forecast assumes Boston Scientific gives up $100M in ex-U.S. revenues this year and $100M in the U.S. in 2018. Piper Jaffray analyst Brooks West says he believes Boston Scientific's problem is "solvable," as the problem is an issue with the connector pin and not an issue with the valve itself. West says he will "take management at its word" on its updated timelines. PRICE ACTION: In afternoon trading, Edwards Lifesciences is up 3.4% to $95.34, while Boston Scientific is down 3.4% to $24.30.