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A month has gone by since the last earnings report for Baxter International (BAX). Shares have added about 1.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Baxter due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Baxter Q4 Earnings and Revenues Surpass Estimates
Baxter International Inc. reported fourth-quarter 2020 adjusted earnings per share of 80 cents, which outpaced the Zacks Consensus Estimate of 76 cents by 5.3%. However, the bottom line declined 17.5% from the year-ago quarter.
For the full-year 2020, the company reported adjusted EPS of $3.09, which fell 6.6% from 2019 but beat the consensus mark by 1.3%.
Revenues of $3.18 billion beat the Zacks Consensus Estimate of $3.15 billion by 0.8%. The top line improved 4.7% year over year on a reported basis, while 3% and 2% on a constant currency (cc) and operational basis, respectively.
For the full-year 2020, the company reported revenues of $11.67 billion, which rose 2.7% from 2019 and outpaced the consensus mark by 0.2%.
Baxter reports operating results through three geographic segments — Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific).
In Americas, Baxter reported revenues of $1.61 billion, down 1.1% on a year-over-year basis and flat at cc.
In EMEA, revenues totaled $867 million, up 9.9% from the year-ago quarter and 5% at cc.
In APAC, revenues of $700 million improved 13.3% from the prior-year quarter and 8% at cc.
This segment reported revenues of $1.01 billion in the quarter under review, up 5.5% year over year. Revenues at the segment increased 4% at cc.
Revenues at the segment amounted to $753 million, down 2.8% from the year-ago quarter and 3% at cc.
Revenues at the segment totaled $571 million, down 1.6% from the year-ago quarter and 4% at cc.
Revenues at the segment were $246 million, up 5.6% from the year-ago quarter and 4% at cc.
Revenues at the segment totaled $260 million, up 12.5% from the year-ago quarter and 10% at cc.
This segment reported revenues of $221 million, up 53.4% from the prior-year quarter and 50% at cc.
Revenues in the segment were $117 million, up 0.9% on a year-over-year basis but down 4% at cc.
Baxter reported gross profit of $1.19 billion in the fourth quarter, down 8.2% year over year. As a percentage of revenues, gross margin contracted 530 basis points (bps) on a year-over-year basis at 37.4% in the fourth quarter.
Operating income fell 24.3% year over year to $406 million in the quarter under review. As a percentage of revenues, operating margin contracted 480 bps to 12.8% in the quarter under review.
For first quarter of 2021 the company anticipates sales to grow around 3% on a reported basis but decline in low single digits at cc.
For the same period, adjusted EPS is estimated between 63 cents and 65 cents. The Zacks Consensus Estimate for the same is pegged at 75 cents.
For full-year 2020, Baxter anticipates sales growth in the range of 7-8% on a reported, and 4-5% at cc.
Adjusted earnings per share is estimated in the range of $3.35 to $3.43. The Zacks Consensus Estimate for the same is pegged at $3.43.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -13.96% due to these changes.
Currently, Baxter has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Baxter has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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