Baxter (BAX) to Report Q3 Earnings: Is a Beat in Store?
Baxter International Inc. BAX is scheduled to release third-quarter 2023 results on Nov 2, before the opening bell. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 6.78%. BAX’s earnings missed estimates in two of the trailing four quarters, met once and beat in the other, delivering an average surprise of 2.44%.
Q3 Estimates
Currently, the consensus estimate for third-quarter revenues is pegged at $3.71 billion, indicating a decline of 1.7% from the prior-year quarter’s reported figure. The same for earnings is pinned at 66 cents per share, implying a 19.5% year-over-year decline.
Factors to Note
For the third quarter, Baxter expects sales to grow 2% on a reported basis and 1% at constant currency basis. Adjusted earnings per share is expected between 65 cents and 67 cents. Earnings outlook for the quarter reflects inflationary pressure, rising interest expenses and higher tax rate.
Strong performance in international markets is likely to have driven sales of its Clinical Nutrition segment during the third quarter. However, U.S. sales are likely to have been weak. Moreover, a continued rise in surgical volume and elective surgical procedures is expected to have fueled strong growth in Advanced Surgery’s sales.
Our estimate for Clinical Nutrition and Advanced Surgery’s third-quarter 2023 sales is pegged at $244.8 million and $266.7 million, respectively.
Renal Care segment sales reflected a recovering trend during the previous two quarters. However, a potential sales decline in China due to the impact of various government-based procurement initiatives might have continued to hurt Renal sales during the soon-to-be-reported quarter.
Meanwhile, strong growth in Baxter’s PD business and IV therapy portfolio is likely to have been more than offset by lower in-center HD sales, lower infusion system sales and unfavorable currency movement. Our estimate for the segment’s sales is pegged at $900.2 million.
Sales at Acute Therapies segment are also expected to have reflected growth in the United States and strength in the APAC region. Our estimate for Acute Therapies’ sales is pegged at $173.6 million.
Sales at the Pharmaceutical segment are likely to have been boosted by strong growth in the U.S. injectables portfolio, partially offset by lower sales of injectables in the international market. Our estimate for the segment’s sales is pinned at $581.3 million.
In the third quarter of 2023, all of Baxter’s global regions reflected growth at constant currency (cc). In the Americas, the company reported revenues of $1.56 billion, up 5% from the prior-year quarter’s level.
In EMEA, revenues totaled $762 million, up 9% at cc from the year-ago quarter’s figure. In APAC, revenues of $638 million were up 4% at cc year over year. The trend is likely to have continued in the to-be-reported quarter.
Meanwhile, three new product categories that were added to the Hillrom buyout in 2021 generated sales of $743 million in the second quarter. These products are likely to have brought additional sales during the third quarter.
Continued demand for the physical assessment and cardiology portfolios within the Front Line Care business might have driven Hillrom’s third-quarter sales. Meanwhile, inflationary pressure, as well as freight and supply-chain constraints, are likely to have increased the cost of goods, hurting gross margin. However, these headwinds are likely to have been softer than those in the last reported quarter.
Baxter has proposed the spin-off of its Kidney Care company, including Renal Care and Acute Therapies businesses, earlier this year. It is likely to have completed the spin-off in July 2024. The company may provide details on the divestment during its third-quarter earnings call.
The company is also pursuing strategic alternatives for its BioPharma Solutions business. Investors may ask questions related to its progress with strategic alternatives.
Baxter International Inc. Price and Consensus
Baxter International Inc. price-consensus-chart | Baxter International Inc. Quote
What the Zacks Model Unveils
Our proven model predicts an earnings beat for DENTSPLY SIRONA this time around. The combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (69 cents per share) and the Zacks Consensus Estimate (66 cents per share), is +3.86%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks Rank: Baxter currently has a Zacks Rank #2.
Other Stocks Worth a Look
Here are some other medical stocks worth considering as these too have the right combination of elements to post an earnings beat this reporting cycle.
ShockWave Medical SWAV has an Earnings ESP of +6.07% and a Zacks Rank of 1 at present.
The stock has gained 0.6% year to date. SWAV’s earnings beat estimates in the last reported quarter. It has a trailing four-quarter average earnings surprise of 81.14%.
Canopy Growth CGC has an Earnings ESP of +28% and a Zacks Rank of 2 at present.
The stock has lost 78.1% year to date. CGC’s earnings beat estimates in the last reported quarter. It has a trailing four-quarter average negative earnings surprise of 64.12%.
Avanos Medical AVNS has an Earnings ESP of +3.45% and a Zacks Rank of 3 at present.
The stock has lost 34.2% year to date. AVNS’ earnings missed estimates in the last reported quarter. It has a trailing four-quarter average negative earnings surprise of 0.61%.
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Baxter International Inc. (BAX) : Free Stock Analysis Report
Canopy Growth Corporation (CGC) : Free Stock Analysis Report
AVANOS MEDICAL, INC. (AVNS) : Free Stock Analysis Report
ShockWave Medical, Inc. (SWAV) : Free Stock Analysis Report
