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Here's Why You Should Snap Up Baxter International (BAX) Now

Zacks Equity Research

Baxter International Inc. BAX is expected to gain from a solid second-quarter show and new developments.

Over the past year, shares of this Zacks Rank #2 (Buy) company have rallied 19.1% compared with the industry’s 3.8% rise. The current level also compares favorably with the S&P 500 index’s 1.3% decline.

What’s Favoring the Stock?

Solid Q2 Earnings

In the recently-reported second quarter, Baxter delivered adjusted earnings of 89 cents per share and revenues worth $2.84 billion. Notably, both the metrics outpaced the consensus estimate.

Given the strong second-quarter performance, Baxter raised the 2019 earnings per share guidance to the band of $3.34-$3.40, from the previous $3.27-$3.35.

The company projects sales growth in the range of 1-2% on a reported basis, and about 4% on both cc and operational basis.

For the third quarter of 2019, management at Baxter expects revenues to grow in the range of 3-4% on a reported basis, and approximately 5% on both cc and operational basis. Adjusted earnings are projected in the range of 82-84 cents per diluted share.

Baxter International Inc. Price and Consensus

Baxter International Inc. Price and Consensus

Baxter International Inc. price-consensus-chart | Baxter International Inc. Quote

Developments

Baxter and COSMED srl, a worldwide leader in the design of metabolic systems, have announced an agreement to commercialize Q-NRG+, a metabolic monitoring device utilizing indirect calorimetry technology. This agreement will enable Baxter to introduce Q-NRG+ to 18 key countries, thereby expanding its global footprint.

Additionally, Baxter has announced that Hamilton Health Care System will now be the first health system in the United States to utilize its new PrisMax system. This advanced technology is expected to enhance Baxter’s Acute Therapies business. Notably, for the Acute Therapies business, Baxter, which is a worldwide leading player in acute care, expects growth of approximately 7% to 8% on a year-over-year basis in 2019. (Read More: Baxter's PrisMax Adopted by Hamilton Health Care System)

Which Way Are Estimates Headed?

The Zacks Consensus Estimate for third-quarter earnings is pegged at 84 cents, suggesting year-over-year growth of 5%. The same for revenues is pinned at $2.86 billion, calling for a decline of 3.5% year over year.

The Zacks Consensus Estimate for 2019 revenues is at $11.29 billion, indicating a rise of 1.5% year over year. The same for earnings stands at $3.37, calling for growth of 10.49% year over year.

Other Key Picks

Other top-ranked stocks in the broader medical space are Intuitive Surgical ISRG, Stryker Corporation SYK and DENTSPLY SIRONA XRAY, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intuitive Surgical’s long-term earnings growth rate is expected to be 13.3%.

Stryker’s long-term earnings growth rate is anticipated to be 10%.

DENTSPLY’s long-term earnings growth rate is projected at 11.5%.

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