Baxter (BAX) to Report Q4 Earnings: What's in the Cards?
Baxter International Inc. BAX is scheduled to release fourth-quarter 2022 results on Feb 9, before the opening bell. In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Its earnings beat estimates in two of the trailing four quarters, met once and missed once, the average surprise being 4.02%.
Currently, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $3.77 billion, indicating an improvement of 7.4% from the prior-year period. The consensus mark for earnings stands at 94 cents per share, indicating a decline of 9.6% from the year-ago quarter.
Factors to Note
Baxter anticipates total revenues to grow by mid-to-high single-digit percentage points year over year in the fourth quarter. The company expects sales growth of mid-teens on a constant currency basis and approximately flat on an operational basis.
Robust demand for Baxter’s broad multi-chamber product offering is likely to have continued in the fourth quarter, driving sales of Baxter’s Clinical Nutrition segment. Moreover, a continued rise in surgical volume and elective surgical procedures is likely to have fueled strong growth in Advanced Surgery sales. The Zacks Consensus Estimate for Clinical Nutrition segment and Advanced Surgery segment is pegged at $238 million and $255 million, respectively, for the fourth quarter.
However, Renal Care segment sales declined in the first nine months of 2022 and the trend is likely to have continued in the fourth quarter. Strong growth in Baxter’s PD business and IV therapy portfolio is likely to have been more than offset by lower in-center HD sales, lower infusion system sales and unfavorable currency movement. The Zacks Consensus Estimate for the segment stands at $938 million.
The company has multiple collaborations to help manufacture COVID-19 vaccines. However, sales growth of the BioPharma Solutions segment is likely to have been hurt by challenging year-over-year comparisons, resulting from prior-year COVID-related sales. Sales at Acute Therapies segment is also likely to have faced a similar impact in the soon-to-be-reported quarter. The Zacks Consensus Estimate for the BioPharma Solutions segment and the Acute Therapies segment is pegged at $140 million and $185 million, respectively.
Baxter International Inc. Price and Consensus
Baxter International Inc. price-consensus-chart | Baxter International Inc. Quote
Sales of the Pharmaceutical segment are likely to have been hurt by generic competition for certain molecules and supply constraints that impacted product availability. The Zacks Consensus Estimate for the segment stands at $543 million.
In the third quarter, Baxter’s global regions performed weakly due to unfavorable currency movements. In the Americas, Baxter reported revenues of $1.7 billion, down 1%. In EMEA, revenues totaled $692 million, down 11% from the year-ago quarter. In APAC, revenues of $643 million were down 11% year over year. The trend is likely to have continued in the soon-to-be-reported quarter.
Meanwhile, three new product categories added with the Hillrom buyout in December 2021 are likely to have brought additional sales during the fourth quarter. These product categories generated $735 million in the third quarter. Baxter anticipates that shortage of electromechanical components is likely to hamper sales growth for select businesses, including medication delivery, front line care and patient support systems.
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 chances of an earnings beat. That is not the case here as you will see.
Earnings ESP: Baxter has an Earnings ESP of +1.28%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle:
McKesson MCK has an Earnings ESP of +0.21% and has a Zacks Rank #2 . MCK has an earnings yield of 6.6%, which compares favorably with the industry’s yield of 4.5%.
McKesson’s earnings surpassed estimates in two of the trailing four quarters and missed twice, with the average surprise being 4.79%.
Cardinal Health CAH has an Earnings ESP of +5.75% and a Zacks Rank of 2. CAH has an estimated long-term growth rate of 11.7%.
Cardinal Health’s earnings surpassed estimates in two of the trailing four quarters and missed twice, with the average surprise being 3.04%.
Laboratory Corp. of America LH has an Earnings ESP of +2.67% and a Zacks Rank of 2 at present. LH has an earnings yield of 7%, which compares favorably with the industry’s yield of 4.5%.
Laboratory Corp. of America‘s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 6.06%.
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Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report
Baxter International Inc. (BAX) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
McKesson Corporation (MCK) : Free Stock Analysis Report
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