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

Zacks Equity Research

Baxter International Inc. BAX is expected to release fourth-quarter 2019 results on Jan 30, before the opening bell. In the last reported quarter, the company reported preliminary third-quarter revenues but did not release any earnings number.

Q4 Estimates

Currently, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $2.95 billion, suggesting growth of 3.7% from the year-ago reported figure. The consensus mark for earnings is pegged at 87 cents per share, indicating an improvement of 11.5% from the prior-year quarter.

Factors at Play

New product launches, including PrisMax in the United States, and rising global demand for the company’s continuous renal replacement therapies is likely to have contributed to Baxter’s Acute Therapies business. This, in turn, is likely to have driven the segment’s fourth-quarter performance.

Continued geographic expansion is anticipated to get reflected in the company’s fourth-quarter revenues. Notably, per the company’s preliminary announcement, revenues are anticipated to total $3 billion, up 7% year over year on a reported basis and 9% on an operational basis.

Baxter International Inc. Price and EPS Surprise

 

Baxter International Inc. Price and EPS Surprise

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

Moreover, the top line is anticipated to have benefited from Baxter’s strong product portfolio, and the planned launch of therapies and products.

Per the preliminary announcement, geographic regions and all of the company’s six global business units is likely to have contributed to sales in the fourth quarter.

Further, growing demand for Baxter’s Spectrum IQ and Evo IQ infusion pumps is likely to have positively impacted the fourth-quarter performance.

Rising demand of its hospital pharmacy compounding services, generic injectables and anesthesia products are likely to have driven the company’s international sales.

In fact, as per the company’s preliminary announcement, Baxter’s revenues in EMEA (Europe, Middle East and Africa) totaled $789 million, up 2-3% from the year-ago quarter on a reported basis and 5% on a constant currency (cc) basis. Meanwhile, the company generated revenues of $618 million in APAC (Asia Pacific), improving 7-8% from the prior-year quarter on a reported basis and 9% at cc.

During the third quarter of 2019, the company introduced new data associating Sharesource remote patient management platform with reductions in hospitalizations for home PD patients. Moreover, the company achieved substantial milestones in its innovation pipeline, which includes U.S. and Canadian launches of PrisMax, U.S. launch of Myxredlin, European launch of Finomel along with U.S. launch of Clinolipid.
Consequently, these launches are likely to get reflected in the company’s fourth-quarter performance.

However, the strategic exit made in the U.S. Bloodline’s business is expected to have negatively impacted Renal Care sales by around $55 million in 2019. This is likely to have weighed on the company’s fourth-quarter performance.

Also, Baxter’s Pharmaceutical business faces increasing generic competition for cyclophosphamide and Brevibloc.

What Our Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here as you will see below.

Earnings ESP: Baxter has an Earnings ESP of -0.66%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Baxter carries a Zacks Rank #3.

Stocks to Consider

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Stryker Corporation SYK has an Earnings ESP of +0.60% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

DexCom, Inc. DXCM has an Earnings ESP of +17.07% and a Zacks Rank #2.

Zimmer Biomet Holdings, Inc. ZBH has an Earnings ESP of +0.38% and a Zacks Rank #3.

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