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Reasons to Retain Baxter International Stock in Your Portfolio Now

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Key Takeaways

  • BAX's Advanced Surgery grew 11% globally in Q3, while U.S. capital orders jumped 30% in Healthcare Systems.
  • BAX plans to cut its dividend in 2026, freeing $300M annually to speed deleveraging and boost flexibility.
  • BAX faces headwinds from the Novum pump hold, weak IV demand, and margin pressure in Pharmaceuticals.

Baxter International (BAX - Free Report) is currently in transition following the divestiture of Kidney Care, balancing near-term execution challenges with longer-term structural opportunities. Management commentary highlights resilience in select franchises, improving operational discipline, and a renewed focus on balance sheet strength amid product-specific and demand-related headwinds.

Shares of this Zacks Rank #3 (Hold) company have lost 37.1% in the past six months compared with the industry's 4.6% decline. The S&P 500 Index has jumped 9% in the same time frame.

BAX, with a market capitalization of $9.82 billion, is a global medical technology company providing items, such as infusion pumps and intravenous solutions. The company has an earnings yield of 12.5% compared with the industry's 0.2%. It anticipates earnings to improve 7.4% over the next five years.

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Positive Factors Driving Prospects

Strength in Advanced Surgery and Healthcare Systems: Baxter’s Advanced Surgery business continues to stand out as a reliable growth engine, delivering 11% global growth in the third quarter on strong demand for hemostats and sealants and steady procedural volumes. Meanwhile, Healthcare Systems & Technologies gained momentum, with U.S. capital orders up 30% year over year and double-digit growth in Surgical Solutions, underscoring Baxter’s strong hospital footprint and resilient demand for workflow, connectivity, and perioperative solutions despite macro uncertainty.

Balance Sheet Repair and Deleveraging Focus: Management’s decision to sharply reduce the dividend beginning in 2026 signals a clear prioritization of deleveraging and financial flexibility. The move is expected to free more than $300 million annually, accelerating progress toward the company’s 3x net leverage target by 2026-end. Lower interest expense following recent debt paydowns is already evident in the third-quarter results. Over time, a stronger balance sheet should support greater reinvestment in innovation, tuck-in M&A, and more sustainable shareholder returns.

Operational Discipline and Continuous Improvement Culture: The launch of Baxter GPS, a company-wide growth and performance system, signals a renewed emphasis on execution, standardized metrics and continuous improvement. Early adoption is intended to improve cost discipline, working capital efficiency, and operational consistency across divisions. Combined with disciplined SG&A control and improving operating margins despite volume pressure, this framework positions Baxter to translate modest top-line recovery into more meaningful margin and cash flow expansion once product and demand headwinds ease.

Key Challenges

Prolonged Novum Infusion Pump Disruption: The shipment and installation hold on the Novum IQ large-volume pump remains Baxter’s key operational challenge and is now expected to extend beyond 2025. This continues to pressure Infusion Therapies & Technologies sales and elevate customer uncertainty. While Spectrum IQ offers some offset, prolonged delays raise the risk of lost placements, customer attrition, and manufacturing underutilization, weighing on growth and investor confidence.

Persistent Softness in IV Solutions Demand: U.S. IV solutions demand remains below pre–Hurricane Helene levels due to continued fluid conservation practices at hospitals. Management expects recovery to be gradual, with some degree of conservation likely extending into 2026. This dynamic weighs on volumes, manufacturing absorption, and gross margins, limiting operating leverage. While Baxter remains confident in the long-term fundamentals of the IV business, near-term visibility is constrained, complicating forecasting and pressuring the company’s overall growth algorithm.

Unfavorable Mix and Margin Pressure in Pharmaceuticals: Within Pharmaceuticals, growth is increasingly driven by lower-margin compounding services, while higher-margin injectables and premix products face softness, particularly in the United States. Shifts in clinical protocols toward IV push and competitive pricing pressures have weighed on mix and profitability, contributing to margin contraction. Although management is reinforcing the clinical value of premix offerings and improving commercial execution, recovery is likely to be incremental, leaving the segment a near-term drag on consolidated margin expansion.

Estimate Trend

The Zacks Consensus Estimate for 2025 revenues is pegged at $11.07 billion, indicating a 13.9% decline from the previous year’s level.

The consensus mark for adjusted earnings per share (EPS) is pinned at $2.36, indicating a 24.9% increase from the year-ago reported number. The consensus estimate for adjusted EPS has remained stable in the past 30 days.

Stocks to Consider

Some better-ranked stocks in the broader medical space are Phibro Animal Health (PAHC - Free Report) , Insulet (PODD - Free Report) and Cencora, Inc. (COR - Free Report) .

Phibro Animal Health, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.8%. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 20.77%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Phibro Animal Health’s shares have rallied 47.1% against the industry’s 4.6% decline in the past six months.

Insulet, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 29%. PODD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.75%.

Insulet’s shares have declined 7.7% compared with the industry’s 4.6% fall in the past six months.

Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 11.9%. COR’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 4.9%.

Cencora’s shares have gained 13.5% compared with the industry’s 6.1% increase in the past six months.

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