Baxter Posts Upbeat Q4 Preliminary Results, Issues Guidance

Baxter International Inc. BAX recently announced preliminary results for fourth-quarter and full-year 2019.

Revenues are anticipated to total $3 billion, up 7% year over year on a reported basis and 9% on an operational basis. The Zacks Consensus Estimate for the same is pegged at $2.95 billion.

The company estimates operating margin to be above its previously guided range of 15.2-15.9% of sales. Further, Baxter expects adjusted operating margin to be above the prior guided range of 18.5-19% of sales. This projection represents solid revenues and operational performance.

The company anticipates releasing its fourth-quarter and full-year financial results no later than the end of the first quarter of 2020.

Notably, the Zacks Rank #3 (Hold) stock has rallied 4.7% compared with the industry and S&P 500 Index’s 3.2% and 8.9% growth, respectively, in the past six months.

Full-Year Results

On a full-year basis, revenues are expected to be $11.4 billion, indicating an increase of 2% year over year on a reported basis and 5% on an operational basis. The Zacks Consensus Estimate for revenues is pegged at $11.28 billion.

Geographical Details

Baxter reports preliminary operating results through three geographic segments — Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific).

In Americas, Baxter recorded revenues of $1.63 billion, up 9% year over year on a reported basis and 10% on a constant currency (cc) basis.

In EMEA, revenues totaled $789 million, up 2-3% from the year-ago quarter on a reported basis and 5% at cc.

In APAC, revenues of $618 million increased 7-8% from the prior-year quarter on a reported basis and 9% at cc.

Segmental Details

Per the preliminary results, Baxter’s results of its global business units are as follows.

Renal Care

This segment reported revenues of $960 million in the quarter under review, up 1% year over year. Revenues at the segment increased 2% at cc.

Medication Delivery

Revenues at the segment grossed $775 million, up 17-18% from the year-ago quarter and 19% at cc.

Pharmaceuticals

Revenues at the segment amounted to $580 million, up 7-8% from the year-ago quarter and 9% at cc.

Clinical Nutrition

Revenues at the segment were $233 million, up 8% from the year-ago quarter and 10% at cc.

Advanced Surgery

Revenues at the segment totaled $231 million, up 8% from the year-ago quarter and 9-10% at cc.

Acute Therapies

This segment reported revenues of $144 million, up 5-6% from the prior-year quarter and increased 7% at cc.

Other

Revenues in the segment grossed $116 million, down 4-5% on a year-over-year basis and 2-3% at cc.

Preliminary Full-Year 2020 Guidance

Baxter projects net sales growth of 4% to 5% on both a reported and constant currency basis. The company expects operating margin to be 17% to 18% on a reported basis and 19% to 20% on an adjusted basis. The guidance represents the company’s continued commitment toward operational excellence, while prioritizing reinvestment in the business to fuel accelerated growth and sustained performance.

It is important to note here that the outlook does not give effect to the proposed Seprafilm acquisition, which is expected to be completed during first-quarter 2020.

Our Take

Baxter is anticipated to have delivered a solid fourth-quarter performance. Notably, the company’s top line is projected to beat the consensus mark. Moreover, geographic regions and all of the company’s six global business units contributed to positive sales performance in the quarter.

Key Picks

Some better-ranked stocks from the broader medical space include Patterson Companies, Inc. PDCO, West Pharmaceutical Services, Inc. WST and DENTSPLY SIRONA, Inc. XRAY, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Patterson Companies has an expected long-term earnings growth rate of 6.4%.

West Pharmaceutical has an estimated long-term earnings growth rate of 14%.

DENTSPLY SIRONA has a projected long-term earnings growth rate of 11.6%.

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