Baxter (BAX) to Report Q3 Earnings: What's in the Cards?

Baxter International Inc. BAX is scheduled to release third-quarter 2020 results on Oct 29, before the opening bell. In the last reported quarter, the company delivered negative earnings surprise of 9.9%.

Q3 Estimates

Currently, the Zacks Consensus Estimate for third-quarter revenues is pegged at $2.83 billion. Meanwhile, the consensus mark for earnings stands at 73 cents per share.

Factors to Note

Increased demand for acute therapies products due to the COVID-19 pandemic, and continuous renal replacement therapies, devices and associated consumables are likely to have driven Baxter’s Acute Therapies business’ third-quarter performance. In fact, the consensus mark for this segment’s revenues is pegged at $166 million, indicating an improvement of 27.7% from the prior-year quarter.

Moreover, the company’s strong product portfolio, and the planned launch of therapies and products might get reflected in the third-quarter revenues.
Further, growing demand for Baxter’s Evo IQ Infusion System may have positively impacted the third-quarter performance.

Rising demand of its hospital pharmacy compounding services, generic injectables and anesthesia products might have contributed to its international sales.

Baxter International Inc. Price and EPS Surprise

Baxter International Inc. Price and EPS Surprise

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

During first-quarter 2020, Baxter entered a partnership with MedAware, which is a specialist in clinical big-data analytics and machine learning algorithms that provide artificial intelligence (AI)-based safety software for identifying medication-related errors. The partnership is likely to aid Baxter’s development of next-generation infusion pump dose error reduction software for direct integration into Baxter’s infusion pumps and hospital enterprise connectivity solution.

The company also introduced a new generation of Peri-Strips Dry with Veritas Collagen Matrix (PSDV) surgical product, known as PSDV with Secure Grip, in the first quarter of 2020.

In May, the company received CE mark for the Evo IQ Infusion System in the U.K. and Ireland, representing the first in a series of planned regulatory submissions for the Evo IQ system. Additionally, the Evo IQ Infusion System recently received regulatory approval by the Therapeutic Goods Administration (TGA) in Australia.

In January, Baxter announced the enrollment of the first group of patients under a U.S. clinical trial for the company’s flagship peritoneal dialysis (PD) solution generation system. In fact, the FDA has also approved the trial. It is worth mentioning that the system is not yet available for use by patients.

In first-quarter 2020, the company received the Emergency Use Authorization (EUA) from the FDA for the Oxiris filter set, which is the only filter set available in the United States to lower pro-inflammatory cytokine levels in the blood for confirmed COVID-19 cases with confirmed or imminent respiratory failure that require blood purification. Further, during the second quarter, Baxter received FDA clearance of Altapore Shape Bioactive Bone Graft, which is the latest addition to its next-generation bone graft substitute product line.

These developments are likely to have positively impacted the company’s performance in the to-be-reported quarter.

Unlike first-quarter 2020, which had witnessed partial impact of the COVID-19 pandemic, the second quarter bore the brunt of it. This resulted in the deferral of elective and non-critical procedures. Although there has been a slow resumption of elective procedures, the resurgence in cases in several regions of the United States might lead to a pause in the same. Hence, the anticipated impact of the pandemic may have weighed on Advanced Surgery segment’s third-quarter performance.

Also, intense competition in the renal care market might have limited the company’s margins.

What Our Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here as you will see below.

Earnings ESP: Baxter has an Earnings ESP of +0.41%. 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 #4 (Sell).

Stocks Worth a Look

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

Zimmer Biomet Holdings, Inc. ZBH has an Earnings ESP of +4.81% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

GW Pharmaceuticals plc GWPH has an Earnings ESP of +9.65% and a Zacks Rank of 3.

Pacific Biosciences of California, Inc. PACB has an Earnings ESP of +15.39% and a Zacks Rank of 3.

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