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Baxter (BAX) to Report Q3 Earnings: What's in the Offing?

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Baxter International Inc. (BAX - Free Report) is scheduled to release third-quarter 2021 results on Oct 28, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 8.11%. Its earnings beat estimates in each of the trailing four quarters, the average surprise being 11.5%.

Q3 Estimates

Currently, the Zacks Consensus Estimate for third-quarter revenues is pegged at $3.22 billion, indicating an improvement of 8.5% from the prior-year period. The consensus mark for earnings stands at 94 cents per share, suggesting growth of 13.3% from the year-ago quarter.

Factors to Note

Increased demand for acute therapies products due to the COVID-19 pandemic, and continuous renal replacement therapies (CRRT), devices and associated consumables are likely to have driven Baxter’s Acute Therapies business’ third-quarter performance. The consensus mark for this segment’s revenues is pegged at $181 million, suggesting growth of 2.3% from the prior-year quarter.

In the second quarter of 2021, strength shown by the aforementioned segment drove growth across all of Baxter’s product categories. Although per management, the aforementioned heightened demand will slow down with the increase in vaccination rates and decline in COVID-related admissions.

Baxter International Inc. Price and EPS Surprise

Baxter International Inc. Price and EPS Surprise

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

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

During the first quarter of 2021, Baxter inked a deal with Moderna, Inc. for Baxter BioPharma Solutions to offer fill/finish sterile manufacturing services and supply packaging for about 60-90 million doses of the Moderna COVID-19 vaccine in 2021. This partnership follows previous agreements announced with BioNTech and Novavax to offer manufacturing services for their respective COVID-19 vaccines.

During the first quarter, the company acquired rights to specific territories outside of the United States with respect to the widely prescribed chemotherapy medication Caelyx, known as Doxil in several geographies, including the United States. This, in turn, supplements Baxter’s U.S. rights to Doxil (which was acquired in 2019).

In June, the company announced the global launch of the latest version of its next-generation platform, PrisMax 2. In the same month, it introduced the Sharesource Analytics 1.0 premium module, which is the next generation of digital health for home-based peritoneal dialysis (PD) patients.

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

Global growth in patient volumes drove the company’s PD businesses that contributed to higher sales with respect to Baxter’s Renal Care segment in the second quarter. This momentum is likely to have continued in the third quarter as well. The consensus mark for this segment’s revenues stands at $995 million, indicating an improvement of 4.2% from the prior-year quarter.

In the second quarter, the Advanced Surgery segment’s revenues amounted to $256 million, reflecting a surge of 52% from the year-ago quarter and 48% at cc. Improvement in surgical procedure volumes (equal to or slightly above pre-COVID levels) led to the upside. The momentum is likely to have continued in the third quarter. In fact, the consensus mark for this segment’s revenues is pegged at $264 million, suggesting an improvement of 11.9% from the prior-year quarter.

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 +0.64%. 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.

Insulet Corporation (PODD - Free Report) has an Earnings ESP of +15.79% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Canopy Growth Corporation (CGC - Free Report) has an Earnings ESP of +26.83% and a Zacks Rank of 3.

Cardiovascular Systems, Inc. (CSII - Free Report) has an Earnings ESP of +24.59% and a Zacks Rank of 3.