Baxter International (BAX) Q3 Earnings: Surprise in Store?
Baxter International Inc.BAX is set to report third-quarter 2015 results on Oct 27. Last quarter, the company reported earnings of $1.00 which beat the Zacks Consensus Estimate by 6 cents. Notably, Baxter has recorded an average positive earnings surprise of 5.58% over the last four quarters.
Factors at Play
Baxter's expanding product portfolio, benefits from the Baxalta spin-off and cost synergies from the Gambro acquisition are expected to be major tailwinds.
However, unfavorable foreign currency continues to hurt sales which negatively impacted bottom-line growth. Management's cautious guidance for the rest of 2015 reflects this headwind.
Moreover, lack of a diverse product portfolio will be a major headwind for Baxter going forward. Additionally, intense competition in the medical products segment and lackluster hospital spending are major concerns.
Our proven model does not conclusively show that Baxter will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Baxter has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $0.29.
Zacks Rank: Baxter carries a Zacks Rank #1 which increases the predictive power of ESP; but when combined with a 0.00% ESP, it makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
AMAG Pharmaceuticals AMAG with earnings ESP of +39.66% and a Zacks Rank #2.
Affymetrix AFFX with earnings ESP of +14.29% and a Zacks Rank #2.
ICON Public Limited Co. ICLR with earnings ESP of +1.00% and a Zacks Rank #2.