Baxter International Inc. (BAX Quick QuoteBAX - Free Report) is well poised for growth in the coming quarters, backed by a strong product portfolio. A robust first-quarter 2022 performance, along with a strong acute therapies profile, is expected to contribute further. However, generic competition for cyclophosphamide and a sluggish macroeconomic environment are worrying.

Over the past year, this Zacks Rank #3 (Hold) stock has lost 20.1% compared with 32.3% fall of the industry and 12.4% decline of the S&P 500 composite.

The renowned global medical technology company has a market capitalization of $32.94 billion. The company projects 12.6% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 8.5% for the past four quarters, on average.

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Let’s delve deeper.

Acute Therapies Profile: We are upbeat about Baxter’s performance in acute therapies, which has been continuously driven by improving utilization for continuous renal replacement (“CRRT”) globally and increased demand for multi-organ support products. In acute therapies, Baxter offers the first three-in-one oXIRIS set for CRRT therapy and sepsis management protocols.

The company has been witnessing tremendous demand for many products, which includes its PrisMax and Prismaflex control units (monitors).

Strong Product Portfolio: We are upbeat about Baxter’s impressive product portfolio that boasts of improved existing products and new product development. Management has announced plans of introducing new therapies and products that can be expected to further contribute to sales by 2023. Baxter’s product pipeline comprises the addition of generic injectables and the next generation of its premix technology, among other notable mentions.

During the first quarter of 2022, Baxter announced its initial investments in nine start-ups participating in the mHUB Accelerator — the largest and fastest-growing physical product innovation center in the United States.

Strong Q1 Results: Baxter’s solid first-quarter 2022 results buoy optimism. The company witnessed strong performance across four of its business units. Growth in Americas is encouraging. Expansion in both gross and operating margins fuels further optimism.

Downsides

Sluggish Macroeconomic Environment: Baxter depends on the European Union for about a third of its sales. This is a cause for concern, given the sluggish macroeconomic environment, a glum outlook for hospital spending and tightening of reimbursements. The outlook also remains slightly uneasy in the United States, where demand for many healthcare products is soft, with an expectation of further price cuts on account of healthcare reforms.

Generic Competition for Cyclophosphamide: Cyclophosphamide is a part of Baxter's Hospital Products segment. Baxter’s cyclophosphamide performance has lacked luster for the better part of the last five years. Lower cyclophosphamide sales pose a threat to the Integrated Pharmacy Solutions franchise business. Despite a promising portfolio, the company has failed to grab significant market share and substantially grow its top line, thanks to generic competition.

Estimate Trend

Baxter is witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 4.2% south to $4.13.

The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $3.89 billion, suggesting a 25.6% improvement from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN Quick QuoteAMN - Free Report) , Patterson Companies, Inc. (PDCO Quick QuotePDCO - Free Report) and ShockWave Medical, Inc. (SWAV Quick QuoteSWAV - Free Report) .

AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare has gained 13.5% against the industry’s 46% fall in the past year.

Patterson Companies, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.6%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.

Patterson Companies has lost 0.1% compared with the industry’s 10.9% fall over the past year.

ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 44.9% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 189.9%.

ShockWave Medical has gained 6.9% against the industry’s 25.8% fall over the past year.