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Baxter (BAX) to Report Q4 Earnings: What's in the Cards?

Baxter International Inc. BAX is scheduled to release fourth-quarter 2023 results on Feb 8, before the opening bell. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 3.03%. BAX’s earnings missed estimates in two of the trailing four quarters, met once and beat in the other, delivering an average surprise of 3.20%.

Q4 Estimates

Currently, the consensus estimate for fourth-quarter revenues is pegged at $3.8 billion, indicating a decline of 2.3% from the prior-year quarter’s reported figure. The same for earnings is pinned at 86 cents per share, implying a 2.3% year-over-year decline.

Factors to Note

On its third-quarter earnings call, Baxter announced that it has completed the divestment of its BioPharma Solutions (BPS) business. In May, it had signed an agreement to divest the business for $4.25 billion. Although the divestment is a part of Baxter’s restructuring initiatives to drive business growth, it is likely to have resulted in a loss of sales during the soon-to-be-reported quarter.

For the fourth quarter, Baxter expects sales from continuing operations to grow 1-2% on a reported basis and 1% at constant currency (cc) basis. Adjusted earnings per share is expected between 85 cents and 88 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 the Clinical Nutrition segment during the fourth 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.

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.

Baxter International Inc. Price and EPS Surprise

Baxter International Inc. Price and EPS Surprise
Baxter International Inc. Price and EPS Surprise

Baxter International Inc. price-eps-surprise | Baxter International Inc. Quote

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.

Sales in the Acute Therapies segment are also expected to have reflected growth in the United States and strength in the APAC region.

Sales in 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

In the third quarter of 2023, all of Baxter’s global regions reflected growth at cc. In the United States, the company reported revenues of $1.77 billion, flat year over year. In International market, revenues totaled $1.94 billion, up 5% from the year-ago quarter’s figure. The trend is likely to have continued in the to-be-reported quarter.

Continued demand for the physical assessment and cardiology portfolios within the Front Line Care business might have driven Hillrom’s fourth-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 previous reported quarter.

Baxter had proposed the spin-off of its Kidney Care company, including Renal Care and Acute Therapies businesses, earlier this year. It is likely to complete the spin-off in July 2024. The company may provide details on the divestment during its fourth-quarter earnings call.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Baxter this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% for Baxter.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Baxter currently has a Zacks Rank #3.

Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to come up with an earnings beat this reporting cycle.

Dentsply Sirona XRAY has an Earnings ESP of +6.43% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The stock fell 5.2% in the past year. XRAY’s earnings beat estimates in the last reported quarter. It has a trailing four-quarter average earnings surprise of 20.65%.

Merit Medical Systems MMSI has an Earnings ESP of +3.68% and a Zacks Rank of 2 at present.

The stock has risen 15% in the past year. MMSI’s earnings beat estimates in the last reported quarter. It has a trailing four-quarter average earnings surprise of 14.41%.

AMN Healthcare Services AMN has an Earnings ESP of +3.42% and a Zacks Rank of 3 at present.

The stock fell 22.3% in the past year. AMN’s earnings beat estimates in the last reported quarter. It has a trailing four-quarter average earnings surprise of 12.66%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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

Baxter International Inc. (BAX) : Free Stock Analysis Report

DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report

Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report

AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report

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