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Baxter (BAX) Q1 Earnings and Revenues Surpass Estimates

Zacks Equity Research

Baxter International Inc. BAX reported first-quarter 2019 adjusted earnings of 76 cents per share, which surpassed the Zacks Consensus Estimate of 68 cents by 11.8%. The bottom line also improved 8.6% from the year-ago quarter.

Revenues of $2.63 billion outpaced the Zacks Consensus Estimate of $2.62 billion. The top line declined 1.7% year over year on a reported basis but increased 2% on operational basis.

Geographical Details

Baxter reports operating results through three geographic segments: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific).

In Americas, Baxter recorded revenues of $1.41 billion, down 2.4% on a year-over-year basis and 1% at constant currency (cc).

In EMEA, revenues totaled $705 million, down 2.6% from the year-ago quarter but up 4% at cc.

In APAC, revenues of $519 million increased 1.6% from the prior-year quarter and 7% at cc.

Baxter International Inc. Price, Consensus and EPS Surprise

 

Baxter International Inc. Price, Consensus and EPS Surprise | Baxter International Inc. Quote

Segmental Details

Renal Care

This segment reported revenues of $851 million in the quarter under review, down 1.9% year over year. Revenues at the segment increased 3% at cc.

Medication Delivery

Revenues at the segment grossed $634 million, down 6.2% from the year-ago quarter and 4% at cc.

Pharmaceuticals

Revenues at the segment amounted to $509 million, up 2.6% from the year-ago quarter and 6% at cc.

Clinical Nutrition

Revenues at the segment were $205 million, down 8.1% from the year-ago quarter and 5% at cc.

Advanced Surgery

Revenues at the segment totaled $198 million, up 8.8% from the year-ago quarter and 12% at cc.

Acute Therapies

This segment reported revenues of $128 million, down 0.8% from the prior-year quarter but increased 4% at cc.

Other

Revenues in the segment grossed $107 million, up 3.9% on a year-over-year basis and 8% at cc.

Margin Analysis

Baxter registered adjusted gross profit of $1.15 billion in the first quarter, down 1.8% year over year. As a percentage of revenues, gross margin contracted 10 bps on a year-over-year basis at 43.7% in the first quarter.

Operating income decreased 11.1% year over year to $384 million in the quarter under review. As a percentage of revenues, operating margin expanded 40 bps to 17.1% in first-quarter 2019.

Guidance

On the basis of the strong performance in the first quarter, Baxter raised earnings guidance for 2019.

Adjusted earnings are anticipated to be in the band of $3.27-$3.35 per share, up from the previously guided range of $3.22-$3.30 per share. The Zacks Consensus Estimate for earnings stands at $3.27, within the company’s guided range.

The company expects sales growth in the range of 0-1% on a reported basis, 2-3% at cc and 3-4% on an operational basis.

For the second quarter of 2019, management at Baxter expects revenues to decline approximately 2% on a reported basis, up approximately 2% at cc and improve in the range of 2-3% on an operational basis. Adjusted earnings are projected to be in the range of 80-82 cents per share. The Zacks Consensus Estimate is pegged at 81 cents, which lies within the guided range.

Summing Up

Baxter ended the first quarter of 2019 on a solid note, beating the Zacks Consensus Estimate on both counts. The stock continues to benefit from its core Advanced Surgery, Pharmaceuticals and Other units.

Growth in APAC buoys optimism. The company has received approval for faster preparation of Floseal Hemostatic Matrix, announced the availability of a NantHealth digital health solution and planned U.S. launch of Clinolipid. This apart, collaboration with bioMerieux and introduction of ready-to-use eptifibatide – a platelet aggregation inhibitor that prevents platelets from sticking together and clotting, are added positives.

In the quarter under review, the company witnessed operating margin expansion. Based on the strong first quarter performance, Baxter raised 2019 earnings outlook.

Meanwhile, Baxter’s Medication Delivery and Clinical Nutrition units have been witnessing sluggishness in recent times. Cutthroat competition in the MedTech markets is indicative of dull prospects.

Zacks Rank and Other Key Picks

Baxter currently carries a Zacks Rank #2 (Buy).

Investors interested in the broader medical space can consider some other top-ranked stocks like Bio-Rad Laboratories, Inc. BIO, ICU Medical Inc. ICUI and DENTSPLY SIRONA Inc. XRAY.

Bio-Rad is scheduled to release first-quarter 2019 results on May 8. The Zacks Consensus Estimate for the quarterly adjusted EPS is pegged at $1.12. The consensus estimate for revenues stands at $548.8 million. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here . 

ICU Medical is scheduled to release first-quarter 2019 results on May 9. The Zacks Consensus Estimate for the period’s adjusted EPS is pegged at $2.18. The consensus estimate for revenues stands at $321.1 million. The stock carries a Zacks Rank #2.

DENTSPLY SIRONA is slated to release first-quarter 2019 results on May 3. The Zacks Consensus Estimate for the quarterly adjusted EPS stands at 38 cents. The consensus estimate for revenues is pegged at $917.1 million. The stock has a Zacks Rank of 2.

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