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Baxter International Inc. (BAX), with a market cap of $17.7 billion, is a global medical technology company in the healthcare sector. The Deerfield, Illinois-based company develops and provides a range of healthcare products, including dialysis equipment, infusion systems, and surgical tools, in approximately 100 countries.
Shares of the drug and medical device maker have significantly underperformed the broader market over the past 52 weeks. BAX has declined 15.9% over this time frame, while the broader S&P 500 Index ($SPX) has soared 17%. In 2024, BAX stock is down 4.5%, compared to SPX's 9.9% gains on a YTD basis.
Zooming in further, BAX also lagged behind the US Medical Devices Ishares ETF's (IHI) roughly 2% returns over the past 52 weeks and a 2.2% YTD increase.
Baxter has underperformed primarily due to supply chain challenges, weak demand in its dialysis operations, and margin compression in several business segments. Plus, delays in orders for its Healthcare Systems & Technologies division and increased debt from the Hillrom acquisition have also negatively impacted performance.
However, the stock surged 6.6% on Aug. 6 due to the company raising its full-year profit forecast and beating Wall Street estimates for Q2 profit, driven by strong sales of its medical devices amid robust demand for medical care. In addition, plans to separate the kidney care unit and potential acquisition talks with The Carlyle Group (CG) boosted investor confidence.
For the current fiscal year, ending in December, analysts expect BAX’s EPS to grow 11.9% year over year to $2.91. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing on another occasion.
Among the 14 analysts covering the stock, the consensus rating is a “Hold.” That’s based on three “Strong Buys,” 10 “Holds,” and one “Moderate Sell.”
This configuration is slightly less bullish than three months before, with four analysts suggesting a "Strong Buy."
On Aug. 6, Jefferies lowered its price target for Baxter International to $42, maintaining a “Hold” rating despite positive Q2 results due to ongoing core challenges and dilution from the Hillrom acquisition.
The mean price target of $42 represents a premium of 13.8% to BAX's current levels. The Street-high price target of $54 implies a potential upside of 46.3% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
