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What's in the Offing for Baxter's (BAX) Earnings in Q3?

Zacks Equity Research

Baxter International Inc. BAX is scheduled to release third-quarter 2019 results on Oct 24, before the opening bell. In the last reported quarter, the company delivered a positive earnings surprise of 9.9%. Further, it has an average four-quarter positive surprise of 9.2%.

Which Way Are Estimates Treading?

Currently, the Zacks Consensus Estimate for third-quarter revenues is pegged at $2.86 billion, suggesting growth of 3.5% from the year-ago reported number. The consensus estimates for earnings is pegged at 84 cents per share, indicating an improvement of 5% from the prior-year quarter.

Baxter International Inc. Price and EPS Surprise


Baxter International Inc. Price and EPS Surprise

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

Factors to Influence Q3

New product launches and the ongoing rollout of PrisMax next-generation technology for continuous renal replacement therapy (CRRT) and Therapeutic Plasma Exchange is likely to have contributed to Baxter’s Acute Therapies business and consequently the segment’s top line in the third quarter. Additionally, continued focus on geographic expansion is anticipated to get reflected in the to-be-reported quarter’s revenues.

In fact, the Zacks Consensus Estimate for the segment’s third-quarter revenues is pegged at $134 million, indicating year-over-year growth of 9.8%.

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

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

With respect to international sales, the company has likely to have experienced higher volume of the same driven by the rising demand of its hospital pharmacy compounding services, generic injectables and anesthesia products.

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

Moreover, headwinds related to Baxter’s U.S. business and exit of the in-center hemo dialysis Bloodline business are likely to have affected the core Renal Care arm.  In fact, management expects the business’ exit to negatively impact Baxter’s Renal Care sales in 2019 by approximately $55 million. Notably, the Zacks Consensus Estimate for the segment’s third-quarter revenues is pegged at $910 million, remaining flat from the year-ago quarter.

What Our Quantitative Model Suggests

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. This is not the case here as you will see below.

Earnings ESP: Baxter has an Earnings ESP of 0.00%. 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 Worth a Look

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

Edward Lifesciences Corporation EW has an Earnings ESP of +0.35% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AmerisourceBergen Corporation ABC has an Earnings ESP of +0.55% and a Zacks Rank #3.

Cardinal Health, Inc. CAH has an Earnings ESP of +1.50% and a Zacks Rank #3.

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