Baxter International Inc.
) is slated to report its 2014-second-quarter earnings on Jul 17,
before the opening bell. In the previous quarter, Baxter recorded a
positive earnings surprise of 8.18%. Let's see how things are
shaping up for this announcement.
Growth Factors This Past Quarter
In the last reported quarter, Baxter topped estimates on both
fronts. Growth was strongly driven by the Gambro acquisition which
strengthened Baxter's existing line of dialysis products as well as
its position in the hemodialysis market. Strong sales of peritoneal
dialysis products and certain injectable drugs also led to the
improvement in Medical Products revenues.
Baxter continues to benefit from robust growth of ADVATE
(Antihemophilic Factor [Recombinant], Plasma/Albumin-Free Method)
and FEIBA (an inhibitor therapy) and higher U.S. sales of
However, Baxter depends on the EU market for about a third of its
revenues. This is a cause for concern given the recent fiscal
tightening, a gloomy outlook for hospital spending and tightening
of reimbursement. The company also faces pricing pressure due to
the advent of group purchasing organizations (GPO) in the U.S.,
which might pressurize the company's top line to a certain extent.
Our proven model does not conclusively show that Baxter is likely
to beat earnings this quarter. That is because a stock needs to
have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. This is not the
case here as you will see below:
: The Earnings ESP, which represents the difference between the
Most Accurate estimate and the Zacks Consensus Estimate, is
currently pegged at 0.00%. This is because both the Most Accurate
estimate and the Zacks Consensus Estimate stand at $1.21.
: Baxter's Zacks Rank #3 (Hold) when combined with an ESP of 0.00%
makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model
shows they have the right combination of elements to post an
earnings beat this quarter:
) with an Earnings ESP of +1.79% and a Zacks Rank #1 (Strong
Wright Medical Group Inc.
) with an Earnings ESP of +2.22% and a Zacks Rank #1 (Strong Buy).
) with an Earnings ESP of +30.77% and a Zacks Rank #3 (Hold).
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