We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Reasons to Hold Baxter International (BAX) in Your Portfolio
Read MoreHide Full Article
Baxter International (BAX - Free Report) is poised for growth, given the demand for its medically essential products, coupled with transformational actions. However, inflationary pressure remains a concern.
Shares of this Zacks Rank #3 (Hold) company have gained 10.8% year to date compared with the industry's 5.3% growth. The S&P 500 Index has increased 9.4% in the same time frame.
BAX, with a market capitalization of $21.46 billion, is a global medical technology company providing items such as kidney-dialysis equipment, infusion pumps and intravenous solutions. The company has an earnings yield of 6.8% compared with the flat yield for the industry. It anticipates earnings to improve 6.4% over the next five years.
Image Source: Zacks Investment Research
What's Driving the Performance?
Baxter International ended the fourth quarter of 2023 with an improvement in both earnings and revenues. Sales across all product categories were strong except for a decline in the Patient Support Systems, led by lower rental revenues.
The company expects the demand for its medically essential products to continue amid stabilizing macroeconomic conditions and the healthcare marketplace. BAX stated that the ongoing transformational actions announced earlier this year will likely boost its performance in the future.
The transformational actions, which include realigning its businesses and operations into four vertically integrated global business segments, are likely to be completed in July 2024. Baxter International is also progressing with the proposed spin-off of its Kidney Care segment, comprising Renal Care and Acute Therapies product categories, into an independent, publicly traded company. This is also part of BAX’s transformational actions.
As part of the divestment of its BioPharma Solutions business, BAX established its new operating model, integrating the prior matrixed structure of its nine businesses operating across three geographic regions into the aforementioned four verticalized global segments. The company started reporting under a new model, beginning third-quarter 2023.
Revenues from continued operations totaled $3.89 billion in the fourth quarter, up 4% on a reported basis and 3% at constant currency.
Gross profit improved 5.7% year over year and as a percentage of revenues and operating margin also improved 11.6% year over year in the fourth quarter.
Notable Developments
Baxter recently received the FDA’s 510(k) clearance for its Novum IQ large volume infusion pump (LVP) with Dose IQ Safety Software. Adding LVP modality to the Novum IQ Infusion Platform, which includes Baxter’s syringe infusion pump with Dose IQ Safety Software, powered by the IQ Enterprise Connectivity Suite, is expected to enable clinicians to utilize a single, integrated system across a variety of patient care settings.
What's Weighing on the Stock?
Although recovering, the company continues to face pressure for services related to hospital admissions and procedural volumes. Supply-chain disruptions continue to hurt growth, albeit slowly compared with the last few quarters. Lower rental revenues and reduced hospital capital spending continue to impact top-line growth. A decline in sales in China due to the implementation of value-based procurement initiatives is likely to continue in the country.
Estimates Trend
The Zacks Consensus Estimate for 2024 revenues is pegged at $15.1 billion, indicating a 1.04% improvement from the previous year’s level. Revenues are likely to witness an estimated growth rate of 3.79% in 2025.
The consensus mark for adjusted earnings per share (EPS) is pinned at $2.89, indicating an 11.15% improvement year over year. The consensus estimate for adjusted EPS has remained flat in the past 30 days. However, EPS is likely to witness an estimated growth rate of 10.7% in 2025.
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and LeMaitre Vascular, Inc. (LMAT - Free Report) .
DaVita, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 61.6% compared with the industry’s 17.6% rise in the past year.
Cardinal Health, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 38.1% compared with the industry’s 9.7% rise in the past year.
LeMaitre Vascular, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14%. LMAT’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.9%.
LeMaitre Vascular’s shares have rallied 20.8% compared with the industry’s 2.6% rise in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Reasons to Hold Baxter International (BAX) in Your Portfolio
Baxter International (BAX - Free Report) is poised for growth, given the demand for its medically essential products, coupled with transformational actions. However, inflationary pressure remains a concern.
Shares of this Zacks Rank #3 (Hold) company have gained 10.8% year to date compared with the industry's 5.3% growth. The S&P 500 Index has increased 9.4% in the same time frame.
BAX, with a market capitalization of $21.46 billion, is a global medical technology company providing items such as kidney-dialysis equipment, infusion pumps and intravenous solutions. The company has an earnings yield of 6.8% compared with the flat yield for the industry. It anticipates earnings to improve 6.4% over the next five years.
Image Source: Zacks Investment Research
What's Driving the Performance?
Baxter International ended the fourth quarter of 2023 with an improvement in both earnings and revenues. Sales across all product categories were strong except for a decline in the Patient Support Systems, led by lower rental revenues.
The company expects the demand for its medically essential products to continue amid stabilizing macroeconomic conditions and the healthcare marketplace. BAX stated that the ongoing transformational actions announced earlier this year will likely boost its performance in the future.
The transformational actions, which include realigning its businesses and operations into four vertically integrated global business segments, are likely to be completed in July 2024. Baxter International is also progressing with the proposed spin-off of its Kidney Care segment, comprising Renal Care and Acute Therapies product categories, into an independent, publicly traded company. This is also part of BAX’s transformational actions.
As part of the divestment of its BioPharma Solutions business, BAX established its new operating model, integrating the prior matrixed structure of its nine businesses operating across three geographic regions into the aforementioned four verticalized global segments. The company started reporting under a new model, beginning third-quarter 2023.
Revenues from continued operations totaled $3.89 billion in the fourth quarter, up 4% on a reported basis and 3% at constant currency.
Gross profit improved 5.7% year over year and as a percentage of revenues and operating margin also improved 11.6% year over year in the fourth quarter.
Notable Developments
Baxter recently received the FDA’s 510(k) clearance for its Novum IQ large volume infusion pump (LVP) with Dose IQ Safety Software. Adding LVP modality to the Novum IQ Infusion Platform, which includes Baxter’s syringe infusion pump with Dose IQ Safety Software, powered by the IQ Enterprise Connectivity Suite, is expected to enable clinicians to utilize a single, integrated system across a variety of patient care settings.
What's Weighing on the Stock?
Although recovering, the company continues to face pressure for services related to hospital admissions and procedural volumes. Supply-chain disruptions continue to hurt growth, albeit slowly compared with the last few quarters. Lower rental revenues and reduced hospital capital spending continue to impact top-line growth. A decline in sales in China due to the implementation of value-based procurement initiatives is likely to continue in the country.
Estimates Trend
The Zacks Consensus Estimate for 2024 revenues is pegged at $15.1 billion, indicating a 1.04% improvement from the previous year’s level. Revenues are likely to witness an estimated growth rate of 3.79% in 2025.
The consensus mark for adjusted earnings per share (EPS) is pinned at $2.89, indicating an 11.15% improvement year over year. The consensus estimate for adjusted EPS has remained flat in the past 30 days. However, EPS is likely to witness an estimated growth rate of 10.7% in 2025.
Baxter International Inc. Price
Baxter International Inc. price | Baxter International Inc. Quote
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and LeMaitre Vascular, Inc. (LMAT - Free Report) .
DaVita, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 61.6% compared with the industry’s 17.6% rise in the past year.
Cardinal Health, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 38.1% compared with the industry’s 9.7% rise in the past year.
LeMaitre Vascular, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14%. LMAT’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.9%.
LeMaitre Vascular’s shares have rallied 20.8% compared with the industry’s 2.6% rise in the past year.