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Here's Why You Should Hold Baxter International (BAX) Now

Zacks

Baxter International Inc. BAX is expected to benefit from a slew of developments and a strong global foothold. However, sluggishness in Medication Delivery and Clinical Nutrition segments raise concern.

The stock currently has a Zacks Rank #3 (Hold).

Price Performance

Over the past year, shares of Baxter have rallied 3.4% compared with the industry’s 1.9% rise. The current level also compares favorably with the S&P 500 index’s 0.7% decline.

What’s Deterring the Stock?

Baxter’s core Medication Delivery and Clinical Nutrition segments witnessed some sluggishness in recent times.

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Notably, in the last reported quarter, sales at the Medication Delivery grossed $652 million, down 4% from the year-ago quarter. Sales at the segment inched down 3% at constant currency (cc). In fact, in 2018, management expects sales to decline low single digits in the segment.

Clinical Nutrition sales were $519 million, up 4.2% from the year-ago quarter and 5% at cc. For 2018, Baxter expects sales to decline low single digits in the segment.

For 2018, Baxter expects revenue growth of 5% on a reported basis and 4% at cc. This is marginally lower than the earlier provided view of 6% on a reported basis and 5% at cc.

Why Should You Retain Baxter?

In recent times, the Illinois-based MedTech giant saw a string of developments.

Earlier this month, it collaborated with the European Foundation for the Care of Newborn Infants (EFCNI) with a view to improve care for preterm born in Europe. (Read More: Baxter & EFCNI Collaborate to Improve Care for Preterm Born)

Last month, the company unveiled Peri-Strips Dry stapler and Tisseel Prima syringe at the 2018 American Society for Metabolic and Bariatric Society Obesity Week meeting. (Read More: Baxter Launches Peri-Strips & Tisseel Prima, Shares Up)

Earlier at the American Association of Gynecologic Laparoscopists, Baxter unveiled the latest design enhancements for its fibrin sealant product, the Tisseel Prima syringe.

Additionally, Baxter enjoys a solid presence in foreign markets. Notably, the company launched the oXIRIS set for continuous renal replacement therapy (CRRT) and sepsis management protocols in select markets of Europe, Middle East and Africa.

In the last reported quarter, Baxter reported sales of $707 million, up 3.7% from the year-ago quarter and 4% at cc in EMEA.

Baxter International Inc. Price and Consensus

Baxter International Inc. Price and Consensus | Baxter International Inc. Quote

Which Way Are Estimates Headed?

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 72 cents, reflecting year-over-year growth of 12.5%. The same for revenues is pinned at $2.80 billion, showing an increase of 1% year over year.

For 2018, the Zacks Consensus Estimate for revenues is at $11.08 billion, reflecting a rise of 5% year over year. The same for earnings stands at $3, showing growth of 21% year over year.

Key Picks

Some better-ranked stocks in the broader medical space are Integer Holdings Corporation ITGR, OPKO Health, Inc. OPK and Surmodics SRDX.

Integer Holdings has an earnings growth rate of 31.2% for the next quarter and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

OPKO Health’s long-term earnings growth rate is projected at 12%. The stock carries a Zacks Rank of 2.

Surmodics’ long-term earnings growth rate is estimated at 10%. The stock carries a Zacks Rank #2.

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