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Baxter (BAX) to Report Q2 Earnings: What's in the Cards?

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Baxter International Inc. (BAX - Free Report) is scheduled to release second-quarter 2020 results on Jul 30, before the opening bell. In the last reported quarter, the company delivered earnings surprise of 12.3%.

Q2 Estimates

Currently, the Zacks Consensus Estimate for first-quarter revenues is pegged at $2.86 billion, suggesting growth of 0.7% from the year-ago reported figure. The consensus mark for earnings stands at 70 cents per share, indicating a decline of 21.4% from the prior-year quarter.

Factors to Note

New product launches, including PrisMax in the United States, and rising global demand for the company’s continuous renal replacement therapies are likely to have driven Baxter’s Acute Therapies business’ second-quarter performance. In fact, the consensus mark for this segment’s revenues is pegged at $160 million, indicating an improvement of 20.3% from the prior-year quarter.

Moreover, the company’s strong product portfolio, and the planned launch of therapies and products might get reflected in the second-quarter revenues.

The company’s five global business units is likely to have contributed to the to-be-reported quarter’s performance.

Further, growing demand for Baxter’s Spectrum IQ and Evo IQ infusion pumps may have positively impacted the second-quarter performance.

Rising demand of its hospital pharmacy compounding services, generic injectables and anesthesia products might have driven its international sales.

Baxter International Inc. Price and EPS Surprise

Baxter International Inc. Price and EPS Surprise

Baxter International Inc. price-eps-surprise | Baxter International Inc. Quote

During first-quarter 2020, Baxter entered a partnership with MedAware — a specialist in clinical big-data analytics and machine learning algorithms that provides artificial intelligence (AI)-based safety software for identifying medication-related errors. The partnership is likely to aid Baxter’s development of next-generation infusion pump dose error reduction software for direct integration into Baxter’s infusion pumps and hospital enterprise connectivity solution.

The company also introduced a new generation of Peri-Strips Dry with Veritas Collagen Matrix (PSDV) surgical product, known as PSDV with Secure Grip, in the first quarter.
In May, the company received CE mark for the Evo IQ Infusion System in the U.K. and Ireland, representing the first in a series of planned regulatory submissions for the Evo IQ system. Additionally, the Evo IQ Infusion System recently received regulatory approval by the Therapeutic Goods Administration (TGA) in Australia.

In January, Baxter announced the enrollment of the first group of patients under a U.S. clinical trial for the company’s flagship peritoneal dialysis (PD) solution generation system. In fact, the FDA has also approved the trial. It is to be noted the the system is not yet available for use by patients.

These developments are likely to have positively impacted the company’s performance in the to-be-reported quarter.

Unlike first-quarter 2020, which had witnessed partial impact of the COVID-19 pandemic, the second quarter bore the brunt of it. This resulted in the deferral of elective and non-critical procedures. Hence, the anticipated impact of the pandemic may have weighed on Baxter’s Advanced Surgery segment in the second quarter.

Also, intense competition in the renal care market might have limited the company’s margins.

What Our Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here as you will see below.

Earnings ESP: Baxter has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Baxter carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Integra LifeSciences Holdings Corporation (IART - Free Report) has an Earnings ESP of +20.69% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +6.69% and a Zacks Rank of 2.

Hologic, Inc. (HOLX - Free Report) has an Earnings ESP of +14.56% and a Zacks Rank of 3.

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