Baxter's 2013-fourth quarter adjusted earnings per share beat the
Zacks Consensus Estimate by a penny despite being flat
year-over-year. Revenues of $4,368 million were up 16.4% and topped
the mark as well. We are impressed by optimistic financial guidance
rendered by the company. Although expensive, the Gambro acquisition
has long term prospects for Baxter. Further, a solid product
pipeline and strategic collaborations, represents key value drivers
for the company. However, we are concerned about
integration-related risks along with a somber outlook for hospital.
As a result, we reiterate our Neutral recommendation on Baxter with
a target of $73.00.
Founded in 1931, Baxter International, Inc. (BAX) is a global
medical products and services company with expertise in medical
devices, pharmaceuticals, and biotechnology. The company is
headquartered in Deerfield, Illinois. Baxter manufactures its
products in 27 countries and markets them in more than 100
countries. Majority of its products are sold outside the U.S.
(58.0% in 2013). The company operates through two business
segments: BioScience and Medical Products.
BioScience segment (43.0% of total revenue in 2013) processes
recombinant and plasma-based proteins to treat hemophilia and other
bleeding disorders plasma-based therapies to treat immune
deficiencies, alpha-1 antitrypsin deficiency, burns and shock, and
other chronic and acute blood-related conditions. It also sells
biosurgery products and vaccines. Currently, the segment includes
four commercial franchises:
Hemophilia This includes sales of recombinant factor VIII
products and plasma-derived hemophilia products (primarily
plasma-derived factor IX, factor VIII and inhibitor therapies).
BioTherapeutics This includes sales of antibody-replacement
immunoglobulin therapies and other plasma-based therapies, such as
albumin and alpha-1 antitrypsin products.
BioSurgery This consists of biological products and medical
devices used in surgical procedures for hemostasis, tissue sealing,
adhesion prevention and hard tissue repair, as well as soft tissue
repair and microsurgery products.
Vaccines This consists of vaccines for meningitis C and
tick-borne encephalitis, and includes ongoing collaborations for
the development of seasonal and pandemic influenza vaccines.
Medical Products segment (57%) manufactures intravenous (IV)
solutions and administration sets, premixed drugs and
drug-reconstitution systems, pre-filled vials and syringes for
injectable drugs, IV nutrition products, infusion pumps, and
inhalation anesthetics. It also manufactures products and provides
services related to pharmacy compounding, drug formulation and
packaging technologies as well as to treat end-stage renal disease,
or irreversible kidney failure. These apart, the segment provides
products and solutions for home-based peritoneal dialysis (PD)
therapy and hospital or clinic-based hemodialysis (HD) therapy.
Currently, the segment includes four commercial franchises:
Fluid Systems This consists of IV therapies, infusion pumps,
administration sets and premixed and oncology drugs platforms.
Renal This includes peritoneal dialysis (PD) and hemodialysis
Specialty Pharmaceuticals This includes nutrition and anesthesia
BioPharma Solutions This comprised sales from the pharmaceutical
partnering business and pharmacy compounding services.
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