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3 Reasons Why You Should Invest in Baxter International Now


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Baxter International Inc. (BAX) has been on a healthy growth trajectory of late. The company rides on a solid first-quarter performance. A raised guidance and strategic acquisitions have lent the company a competitive edge in the MedTech space. The stock, with a Zacks Rank #2 (Buy), is an attractive pick at the moment.

In the past six months, Baxter's shares have rallied 8.7%, compared with the industry's 4.8%. The current level is also higher than the S&P 500 index's gain of 3.6%.

The stock has a market cap of $37.92 billion. The company's earnings growth rate for the next five years is also a favorable 13.2%. Additionally, Baxter has delivered a positive average earnings surprise of 10.1% in the trailing four quarters.

Baxter has an impressive Growth Style Score of A. Our Growth Style Score highlights all the vital metrics of a company's financials to obtain a clearer picture of the quality and sustainability of its growth. Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold), offer the best investment opportunities.

Let's find out the factors that are working in favor of the stock currently.

Solid Earnings

Baxter ended the first quarter on a solid note, beating the consensus mark for earnings and revenues. Adjusted earnings in the quarter came in at 70 cents per share, up from 58 cents in the prior-year quarter.

Revenues were $2.68 billion, up 4%, year over year at constant currency (cc). Geographically, US sales inched up 2% year over year to $1.1 billion. Meanwhile, international sales increased 3% to $1.5 billion year over year. 

The company delivered strong results on the back of solid performance by the core Renal and Pharmaceutical businesses. While Renal unit sales increased 4% on a year-over-year basis, Pharmaceutical sales rose 13%.

Raised Guidance

Buoyed by solid first-quarter earnings results, Baxter raised its financial outlook for 2018. For the second quarter of 2018, the company expects sales growth of approximately 5% at cc. The company expects adjusted earnings from continuing operations in the band of 69-71 cents.

The company also expects sales growth of 5% at cc. It expects adjusted earnings per share from continuing operations in the range of $2.85-$2.93 for the full year.

Strategic Acquisitions

Strategic buyouts have been long helping Baxter International gain market traction. Recently, the company completed the acquisition of RECOTHROM Thrombin topical and PREVELEAK Surgical Sealant product lines from Mallinckrodt. The deal is expected to widen Baxter's surgical portfolio of hemostats and sealants. Although the buyout has not been accretive to first-quarter earnings, Baxter expects it to be so in 2018.

The buyout of India-based Claris Injectables Limited has provided Baxter with a robust portfolio of 'generic injectables with 11 molecules', which are approved in the United States.

Other Key Picks

Other top-ranked stocks in the broader medical space are Bio-Rad Laboratories (BIO), Envision Healthcare Corporation (EVHC) and Fresenius Medical Care (FMS).

Bio-Rad has an expected long-term earnings growth rate of 15%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Envision Healthcare has an expected long-term earnings growth rate of 13%. The stock carries a Zacks Rank #2.

Fresenius has an expected long-term earnings growth rate of 7%. The stock carries a Zacks Rank #2.

The Hottest Tech Mega-Trend of All 

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Baxter International Inc. BAX has been on a healthy growth trajectory of late. The company rides on a solid first-quarter performance. A raised guidance and strategic acquisitions have lent the company a competitive edge in the MedTech space. The stock, with a Zacks Rank #2 (Buy), is an attractive pick at the moment.

In the past six months, Baxter's shares have rallied 8.9%, compared with the  industry 's 4.6%. The current level is also higher than the S&P 500 index's gain of 3.6%.

The stock has a market cap of $37.92 billion. The company's earnings growth rate for the next five years is also a favorable 13.2%. Additionally, Baxter has delivered a positive average earnings surprise of 10.1% in the trailing four quarters.

Baxter has an impressive Growth  Style Score  of A. Our Growth Style Score highlights all the vital metrics of a company's financials to obtain a clearer picture of the quality and sustainability of its growth. Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold), offer the best investment opportunities.

Let's find out the factors that are working in favor of the stock currently.

Solid Earnings

Baxter ended the first quarter on a solid note, beating the consensus mark for earnings and revenues. Adjusted earnings in the quarter came in at 70 cents per share, up from 58 cents in the prior-year quarter.

Revenues were $2.68 billion, up 4%, year over year at constant currency (cc). Geographically, US sales inched up 2% year over year to $1.1 billion. Meanwhile, international sales increased 3% to $1.5 billion year over year.

The company delivered strong results on the back of solid performance by the core Renal and Pharmaceutical businesses. While Renal unit sales increased 4% on a year-over-year basis, Pharmaceutical sales rose 13%.

Raised Guidance

Buoyed by solid first-quarter earnings results, Baxter raised its financial outlook for 2018. For the second quarter of 2018, the company expects sales growth of approximately 5% at cc. The company expects adjusted earnings from continuing operations in the band of 69-71 cents.

The company also expects sales growth of 5% at cc. It expects adjusted earnings per share from continuing operations in the range of $2.85-$2.93 for the full year.

Strategic Acquisitions

Strategic buyouts have been long helping Baxter International gain market traction. Recently, the company completed the acquisition of RECOTHROM Thrombin topical and PREVELEAK Surgical Sealant product lines from Mallinckrodt. The deal is expected to widen Baxter's surgical portfolio of hemostats and sealants. Although the buyout has not been accretive to first-quarter earnings, Baxter expects it to be so in 2018.

The buyout of India-based Claris Injectables Limited has provided Baxter with a robust portfolio of 'generic injectables with 11 molecules', which are approved in the United States.

Other Key Picks

Other top-ranked stocks in the broader medical space are Bio-Rad Laboratories BIO , Envision Healthcare Corporation EVHC and Fresenius Medical Care FMS .

Bio-Rad has an expected long-term earnings growth rate of 15%. The stock sports a Zacks Rank #1 (Strong Buy). You can see  the complete list of today's Zacks #1 Rank stocks here.

Envision Healthcare has an expected long-term earnings growth rate of 13%. The stock carries a Zacks Rank #2.

Fresenius has an expected long-term earnings growth rate of 7%. The stock carries a Zacks Rank #2.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Fresenius Medical Care (FMS): Free Stock Analysis Report

Baxter International Inc. (BAX): Free Stock Analysis Report

Bio-Rad Laboratories, Inc. (BIO): Free Stock Analysis Report

Envision Healthcare Corporation (EVHC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: FMS , BAX , BIO ,



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