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3 Reasons to Retain Baxter (BAX) Stock in Your Portfolio
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Baxter International Inc. (BAX - Free Report) is well poised for growth in the coming quarters, backed by a strong product portfolio. The robust revenue growth in the second quarter of 2022 on the back of a strong acute therapies profile is expected to contribute further. However, generic competition for cyclophosphamide and a sluggish macroeconomic environment is worrying.
So far this year, this Zacks Rank #3 (Hold) stock has lost 35% compared with a 47.7% decline of the industry and a 24.8% decline of the S&P 500 composite.
The renowned global medical technology company has a market capitalization of $27.69 billion. The company projects 7.1% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 6.2% 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 include its PrisMax and Prismaflex control units (monitors).
Strong Product Portfolio: We are upbeat about Baxter’s impressive product portfolio that boasts improved existing products and new product development. Management announced plans to introduce therapies and products that can be expected to further contribute to sales by 2023. Baxter’s product pipeline is witnessing 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. Last month, Baxter announced the receipt of the FDA’s 510(k) clearance for its new Novum IQ syringe infusion pump (SYR) with Dose IQ Safety Software. The company expects to introduce the Novum IQ platform in the global markets to continue delivering a strong and streamlined experience for customers, subject to the receipt of necessary approvals.
Strong Topline Growth in Q2: Baxter’s solid second-quarter 2022 results at constant currency buoy optimism. The company witnessed strong performance across four of its business units. Growth in the Americas is encouraging. However, contraction in both gross and operating margins is a concern.
Downsides
Sluggish Macroeconomic Environment: Baxter depends on the European Union for about a third of its sales. This is a cause of concern, given the sluggish macroeconomic environment, a glum outlook for hospital spending and the 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 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 12.1% south to $3.63.
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $3.78 billion, suggesting a 17.1% improvement from the year-ago quarter’s reported number.
Inogen, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted loss of 2 cents per share, which beat the Zacks Consensus Estimate by 95%. Revenues of $103 million beat the consensus mark by 2.6%.
INGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 90.53%.
CheckCap, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted loss of 4 cents per share, which beat the Zacks Consensus Estimate by 20%.
CHEK’s average earnings surprise in the last four quarters was 13.33%.
McKesson reported second-quarter 2022 adjusted EPS of $5.83, which surpassed the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the Zacks Consensus Estimate by 5.1%. It currently carries a Zacks Rank #2 (Buy).
McKesson has an earnings yield of 6.9% compared with the industry’s 4.9% yield. MCK’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13%.
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3 Reasons to Retain Baxter (BAX) Stock in Your Portfolio
Baxter International Inc. (BAX - Free Report) is well poised for growth in the coming quarters, backed by a strong product portfolio. The robust revenue growth in the second quarter of 2022 on the back of a strong acute therapies profile is expected to contribute further. However, generic competition for cyclophosphamide and a sluggish macroeconomic environment is worrying.
So far this year, this Zacks Rank #3 (Hold) stock has lost 35% compared with a 47.7% decline of the industry and a 24.8% decline of the S&P 500 composite.
The renowned global medical technology company has a market capitalization of $27.69 billion. The company projects 7.1% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 6.2% for the past four quarters, on average.
Image Source: Zacks Investment Research
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 include its PrisMax and Prismaflex control units (monitors).
Strong Product Portfolio: We are upbeat about Baxter’s impressive product portfolio that boasts improved existing products and new product development. Management announced plans to introduce therapies and products that can be expected to further contribute to sales by 2023. Baxter’s product pipeline is witnessing 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. Last month, Baxter announced the receipt of the FDA’s 510(k) clearance for its new Novum IQ syringe infusion pump (SYR) with Dose IQ Safety Software. The company expects to introduce the Novum IQ platform in the global markets to continue delivering a strong and streamlined experience for customers, subject to the receipt of necessary approvals.
Strong Topline Growth in Q2: Baxter’s solid second-quarter 2022 results at constant currency buoy optimism. The company witnessed strong performance across four of its business units. Growth in the Americas is encouraging. However, contraction in both gross and operating margins is a concern.
Downsides
Sluggish Macroeconomic Environment: Baxter depends on the European Union for about a third of its sales. This is a cause of concern, given the sluggish macroeconomic environment, a glum outlook for hospital spending and the 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 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 12.1% south to $3.63.
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $3.78 billion, suggesting a 17.1% improvement from the year-ago quarter’s reported number.
Baxter International Inc. Price
Baxter International Inc. price | Baxter International Inc. Quote
Stocks to Consider
Some better-ranked stocks from the broader medical space are Inogen (INGN - Free Report) , CheckCap (CHEK - Free Report) and McKesson (MCK - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inogen, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted loss of 2 cents per share, which beat the Zacks Consensus Estimate by 95%. Revenues of $103 million beat the consensus mark by 2.6%.
INGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 90.53%.
CheckCap, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted loss of 4 cents per share, which beat the Zacks Consensus Estimate by 20%.
CHEK’s average earnings surprise in the last four quarters was 13.33%.
McKesson reported second-quarter 2022 adjusted EPS of $5.83, which surpassed the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the Zacks Consensus Estimate by 5.1%. It currently carries a Zacks Rank #2 (Buy).
McKesson has an earnings yield of 6.9% compared with the industry’s 4.9% yield. MCK’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13%.