BUY OR SELL-After gains, can Edwards shares keep rallying?

* Shares holding near record peak

* Bulls site new valve technology, strong balance sheet

* Bears say new valve is not ready for prime time

* Bear see looming competition from Medtronic's CoreValve

By Debra Sherman

CHICAGO, July 9 (Reuters) - Shares in Edwards Lifesciences Corp (EW.N) scaled to record levels as the second quarter closed amid expectations the company's program that uses a less-invasive method to replace diseased aortic heart valves will be a success.

While the world's largest maker of heart valves is riding high on its so-called transcatheter aortic valve technology, the world's largest medical device manufacturer, Medtronic Inc (MDT.N), is hot on its heels.

Earlier this year, Medtronic bought two heart valve companies. One was privately held CoreValve, the only competitor to Edwards' transcatheter heart valve called Sapien.

Both Edwards and CoreValve utilize the transcatheter valve implantation technology, in which a catheter is used to implant the heart valve as an alternative to open heart surgery.

Sapien has been approved in Europe, competing head to head with CoreValve. Neither has been approved in the United States, but Edwards has a clinical trial, dubbed Partner, under way.

With Edwards shares holding around $65.00, just under their record price of $66.09, as investors await second-quarter financial results on July 20, is it time to buy or sell?

BUY

Canaccord Adams analyst Jason Mills has a "buy" rating and a 12-month share price target of $72 based upon the price-earnings ratio, a strong balance sheet and positive cash flow, as well his expectation that its its transcatheter heart valve clinical trial will be a success.

Mills said has had heard positive comments about Edwards' transcatheter valves from physicians and he expects Food and Drug Administration approval in late 2011 or early 2012.

Besides second-quarter earnings, other likely near-term catalysts to fuel the rally include the expected FDA approval of Magna Mitral Ease tissue valve in the third quarter, and the completion of the U.S. Partner trial Cohort A, expected in August 2009.

Edwards, which posted 2008 sales of $1.24 billion, is the world's largest maker of heart valves and also makes products used in cardiac surgery and critical care.

"Edwards is diversified enough ... these procedures are non-discretionary," Mills said.

"Their balance sheet is great -- they could be an acquiror to build their business -- and management is very good."

SELL

Suraj Kalia, an analyst with SMH Capital, has a "sell" rating on the shares, with a 12-month share price target of $51.00.

"The whole story behind Edward's rally is transcatheter valves and interesting as it is, there are still too many issues that are unresolved," he said.

For one thing, the technology is expensive and there is no long-term data for payors to consider when making reimbursement decisions.

Kalia says he has concerns about complications, including bleeding and stroke, associated with the procedure.

"Do we have all the information on this? Our due diligence says no. We're not sure the field is ready for a $22,000 device. We don't think payors are going to bite on this -- they want long-term data," he added.

"It's a good technology, but the assumptions bulls on the Street have made are so aggressive. This technology is still in its infancy," he added. (Reporting by Debra Sherman)