Allegion (ALLE) Q1 Earnings Miss, Revenues Beat Estimates
Baxter International Inc. BAX has completed the acquisition of two hemostat and sealant products from Mallinckrodt plc to widen its existing surgical portfolio of hemostats and sealants, especially for intraoperative bleeding. Notably, the company bought RECOTHROM Thrombin topical and PREVELEAK Surgical Sealant product lines from Mallinckrodt.
Baxter expects the deal to be modestly accretive to its 2018 adjusted earnings. Thereafter, the transaction deal will increasingly add capabilities to Baxter’s portfolio, driving its bottom line in turn.
The Deal in Detail
Baxter is buying RECOTHROM and PREVELEAK for an upfront payment of approximately $153 million and potential contingent payments in the near future. The deal was announced earlier in January.
Baxter now gains major traction from RECOTHROM’s (only stand-alone recombinant thrombin) buyout, providing more options of innovative hemostatic products to surgeons for dealing with severities of bleeding. PREVELEAK (used in vascular reconstruction) complements the company’s existing portfolio of advanced surgical sealants.
Baxter’s Surgical Portfolio
Baxter’s surgical portfolio includes products like FLOSEAL Hemostatic Matrix, TISSEEL Fibrin Sealant, COSEAL Surgical Sealant and VASCU-GUARD Patch among others. The portfolio is composed of hemostasis (addressing bleeding), tissue sealing and hard tissue regeneration as well as soft tissue repair and microsurgery with products available in nearly 60 countries.
The company consistently endeavors to improve its Advanced Surgery business. For 2018, the company expects advanced surgery business to increase 3-4% on constant currency basis.
Baxter has also announced plans to focus on launching advanced surgery products in Japan in the coming days.
Per a CISION report, the Global Surgical and Medical device market is anticipated to witness a CAGR of 5.93% over the forecast period of 2017-2026, reaching a worth of $828.6 billion by 2026. Considering the bullish market sentiments, we think this latest development is timely.A leading player in this niche space is Abbott ABT.
Stock Performance & Estimate Revision
Shares of Baxter have outperformed the industry in the past year. The stock has rallied 28.6%, outperforming the S&P 500’s 15.9% gain and the broader industry’s 16.4% rise.
The company’s estimate revision trend for the current year has been positive. In the past couple of months, nine analysts moved north with no revision in the opposite direction. Earnings estimates rose around 2.9% to $2.78.
Zacks Rank & Other Key Picks
Baxter carries a Zacks Rank #2 (Buy). Two other top-ranked stocks in the broader medical sector are Bio-Rad Laboratories BIO and Varian Medical Systems, Inc. VAR.
Bio-Rad Laboratories sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The company has a long-term expected earnings growth rate of 20%.
Varian Medical has a long-term expected earnings growth rate of 8%. The stock carries a Zacks Rank of 2.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Abbott Laboratories (ABT) : Free Stock Analysis Report
Varian Medical Systems, Inc. (VAR) : Free Stock Analysis Report
Baxter International Inc. (BAX) : Free Stock Analysis Report
Bio-Rad Laboratories, Inc. (BIO) : Free Stock Analysis Report
To read this article on Zacks.com click here.