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Baxter (BAX) to Acquire India-Based Claris Injectables
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Headquartered in Deerfield, IL, Baxter International Inc. (BAX - Free Report) , a global medical technology company, has signed a definitive agreement to acquire Claris Lifesciences Limited’s subsidiary Claris Injectables Limited for almost $625 million.
Meanwhile, the stock represents a solid return of almost 1.5%, comparing favorably with the Zacks categorized Medical Products sub-industry’s negative return of almost 5.3%. Shares of Baxter followed the favorable market trend and surged a nominal 0.3% to close at $45.09 following the news release.
Additionally, a long-term expected earnings growth rate of 11.4% and an earnings yield of 4.24%, compared to the industry’s 1.22%, instill confidence among investors on the stock.
The estimate revision trend for the stock has been solid with ten estimates moving north in the last two months. Notably, the current year estimate for the stock increased 19 cents to $1.91 per share over the same time frame.
Coming back to the deal, Claris Injectables is an Ahmedabad, India-based global generic injectables pharmaceutical company. The acquisition is expected to close by the second half of 2017 and is anticipated to be ‘modestly accretive’ to adjusted earnings. However, the transaction is subject to regulatory approvals and certain customary closing conditions.
Of the synergies, Baxter expects to launch seven to nine new products annually over the next few years. This indicates a stellar 10–15 new launches a year after 2019.
Post the deal closure, Baxter will leverage on Claris’ expertise in the production of essential generic injectable medicines. Per management, Baxter can tap into the bountiful opportunities of the global sterile generic injectables market, which has a current worth of $40 billion, and is forecasted to multiply at a 10% CAGR (compound annual growth rate).
The takeover will provide Baxter with a robust portfolio of ‘generic injectables with 11 molecules’ which are approved in the U.S. In fact, Baxter will have its hold on three world-class manufacturing facilities registered with a number of global regulatory agencies (including the U.S. FDA).
Our Take
A research report by the CPhl Pharma Insights reveals that cutthroat competition from low cost manufacturing zones like India and China in the generic market has led to closure of certain sterile manufacturing bigwigs in the U.S. We believe the latest development by Baxter is a prudent move.
Of late, Baxter has been gaining prominence with the launch of AMIA APD system and SHARESOURCE Connectivity in Canada, as these will expand the company’s international footprint. We are also upbeat about the company’s impressive third-quarter 2016 results, driven by favorable product mix, stringent cost control and expanding operating margin. In fact, management provided an encouraging guidance for the rest of 2016.
However, intense competition in the medical products space and lackluster hospital spending are major concerns. Additionally, foreign currency volatility is expected to mar the company’s overall results in the near term.
Zacks Rank & Other Key Picks
Currently, Baxter has a Zacks Rank #1 (Strong Buy).
Other favorably ranked stocks in the broader medical sector include Addus HomeCare Corporation (ADUS - Free Report) , LHC Group, Inc. and HMS Holdings Corp. . Addus HomeCare and LHC Group sport a Zacks Rank #1 while HMS Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Addus HomeCare has a long-term expected earnings growth rate of approximately 15%. Notably, the stock represents an impressive one-year return of 42.4%.
LHC Group has a long-term expected earnings growth rate of 15%. The company has returned almost 1.5% in the last one month.
HMS Holdings has an expected earnings growth of almost 14.3%. The company posted a promising year-to-date return of 53.9%.
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Baxter (BAX) to Acquire India-Based Claris Injectables
Headquartered in Deerfield, IL, Baxter International Inc. (BAX - Free Report) , a global medical technology company, has signed a definitive agreement to acquire Claris Lifesciences Limited’s subsidiary Claris Injectables Limited for almost $625 million.
Meanwhile, the stock represents a solid return of almost 1.5%, comparing favorably with the Zacks categorized Medical Products sub-industry’s negative return of almost 5.3%. Shares of Baxter followed the favorable market trend and surged a nominal 0.3% to close at $45.09 following the news release.
Additionally, a long-term expected earnings growth rate of 11.4% and an earnings yield of 4.24%, compared to the industry’s 1.22%, instill confidence among investors on the stock.
The estimate revision trend for the stock has been solid with ten estimates moving north in the last two months. Notably, the current year estimate for the stock increased 19 cents to $1.91 per share over the same time frame.
Coming back to the deal, Claris Injectables is an Ahmedabad, India-based global generic injectables pharmaceutical company. The acquisition is expected to close by the second half of 2017 and is anticipated to be ‘modestly accretive’ to adjusted earnings. However, the transaction is subject to regulatory approvals and certain customary closing conditions.
BAXTER INTL Price
BAXTER INTL Price | BAXTER INTL Quote
Of the synergies, Baxter expects to launch seven to nine new products annually over the next few years. This indicates a stellar 10–15 new launches a year after 2019.
Post the deal closure, Baxter will leverage on Claris’ expertise in the production of essential generic injectable medicines. Per management, Baxter can tap into the bountiful opportunities of the global sterile generic injectables market, which has a current worth of $40 billion, and is forecasted to multiply at a 10% CAGR (compound annual growth rate).
The takeover will provide Baxter with a robust portfolio of ‘generic injectables with 11 molecules’ which are approved in the U.S. In fact, Baxter will have its hold on three world-class manufacturing facilities registered with a number of global regulatory agencies (including the U.S. FDA).
Our Take
A research report by the CPhl Pharma Insights reveals that cutthroat competition from low cost manufacturing zones like India and China in the generic market has led to closure of certain sterile manufacturing bigwigs in the U.S. We believe the latest development by Baxter is a prudent move.
Of late, Baxter has been gaining prominence with the launch of AMIA APD system and SHARESOURCE Connectivity in Canada, as these will expand the company’s international footprint. We are also upbeat about the company’s impressive third-quarter 2016 results, driven by favorable product mix, stringent cost control and expanding operating margin. In fact, management provided an encouraging guidance for the rest of 2016.
However, intense competition in the medical products space and lackluster hospital spending are major concerns. Additionally, foreign currency volatility is expected to mar the company’s overall results in the near term.
Zacks Rank & Other Key Picks
Currently, Baxter has a Zacks Rank #1 (Strong Buy).
Other favorably ranked stocks in the broader medical sector include Addus HomeCare Corporation (ADUS - Free Report) , LHC Group, Inc. and HMS Holdings Corp. . Addus HomeCare and LHC Group sport a Zacks Rank #1 while HMS Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Addus HomeCare has a long-term expected earnings growth rate of approximately 15%. Notably, the stock represents an impressive one-year return of 42.4%.
LHC Group has a long-term expected earnings growth rate of 15%. The company has returned almost 1.5% in the last one month.
HMS Holdings has an expected earnings growth of almost 14.3%. The company posted a promising year-to-date return of 53.9%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>