On Tuesday, Jefferies, a financial services firm, adjusted its price target for Baxter International (NYSE:BAX), a global medical products company, to $42.00, down from the previous target of $43.00. The firm has decided to maintain its Hold rating on the stock.
Baxter International reported second-quarter 2024 sales of $3.81 billion, which represents a 4% increase on a constant currency basis compared to consensus estimates of $3.75 billion. Earnings per share (EPS) for the quarter were $0.68, showing a 22% increase from the consensus estimate of $0.66. Following the quarterly report, Baxter updated its full-year 2024 revenue growth expectations to approximately 3% year-over-year, adjusted for currency fluctuations.
This forecast is an improvement from both the company's and consensus estimates of 2%. The EPS forecast for the year has also been raised to a range of $2.93 to $3.01, marking a 14% increase from the prior range of $2.88 to $2.98 and slightly above consensus estimates of $2.92.
Despite the positive performance indicators, Jefferies has expressed caution, citing ongoing core challenges faced by the company, as well as dilution from the recent acquisition of Hillrom, referred to as "KC dilution." Nevertheless, the analyst noted that Baxter is making operational progress, which is being supported by the introduction of new products and improved efficiencies that are contributing to better profit margins.
In other recent news, investment firm Pondera Holdings is exploring potential sale options for Whisker, the automated cat litter box producer, potentially valuing the company at $1 billion. The possible sale would likely result in the company's recapitalization, restructuring its finances through new debt and equity. Whisker is working with Bank of America and Houlihan Lokey (NYSE:HLI) to assess its strategic options.
In other developments, Baxter International secured a $2.05 billion credit agreement facilitated by JPMorgan Chase (NYSE:JPM) Bank and other financial institutions. The funds will be used primarily for refinancing purposes, including the repayment of existing senior notes due in November 2024, and to cover certain U.S. tax obligations arising from internal restructuring.
Analysts have recently adjusted their stance on Baxter's stock. Morgan Stanley downgraded Baxter from Equalweight to Underweight, citing concerns about the company's financial outlook and ability to meet market expectations for margins. Goldman Sachs maintained its Neutral rating on Baxter, expressing confidence in the company's operational fundamentals. Baxter also reported a 2% increase in global sales on a reported basis for the first quarter of 2024.
Finally, Baxter received FDA approval to expand the use of its Clinolipid to pediatric patients, extending the product's use to patients of all ages requiring intravenous nutrition. These events are part of the recent developments surrounding both Whisker and Baxter International.
InvestingPro Insights
As Baxter International (NYSE:BAX) navigates through its operational progress and market challenges, insights from InvestingPro provide valuable context for investors. With a market capitalization of $18.73 billion and a dividend yield of 3.35%, Baxter shows a commitment to shareholder returns, having raised its dividend for 7 consecutive years and maintained payments for 54 years. This is a testament to the company's stability and investor-friendly policies, reinforcing its position as a prominent player in the Healthcare Equipment & Supplies industry.
InvestingPro data also highlights a mixed financial performance, with a current P/E ratio of 7.1, suggesting a potentially undervalued stock relative to earnings. However, the adjusted P/E ratio for the last twelve months as of Q1 2024 stands at -366.08, indicating recent profitability challenges. Despite this, analysts predict Baxter will be profitable this year, aligning with the company's positive revenue growth of 2.98% over the last twelve months as of Q1 2024. The company's stock generally trades with low price volatility, which may appeal to risk-averse investors.
For a deeper dive into Baxter's financial health and future prospects, InvestingPro offers additional insights, with more tips available to help investors make informed decisions. Visit InvestingPro for a comprehensive analysis and further tips on Baxter International.
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