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Behind Baxter's 52-Week High

PART:
1 2 3 4 5 6
Part 2
Behind Baxter's 52-Week High PART 2 OF 6

Behind Baxter’s Strong 3Q17 Sales Growth

3Q17 sales results

For 3Q17, Baxter International (BAX) reported sales of ~$2.7 billion. Its constant currency operational sales growth came in at ~6% on a YoY (year-over-year) basis. This sales growth has been adjusted for the impact of currency headwinds, the Claris acquisition, US cyclophosphamide competition, and selected strategic product exits.

Behind Baxter’s Strong 3Q17 Sales Growth

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Peers Thermo Fisher Scientific (TMO), Abbott Laboratories (ABT) and Becton, Dickinson, and Company (BDX) reported sales growth of ~13.9%, ~28.8%, and -5.0%, respectively, in their most recent quarters. Investors can consider investing in the Vanguard S&P 500 ETF (VOO), which has ~0.15% of its total portfolio holdings in Baxter International.

Segment-wise performance

Baxter’s Hospital Products segment sales totaled ~$1.7 billion, representing an operational growth of 6%. Fluid Systems sales rose 7%, driven by the intravenous solutions sales in the US, while the Integrated Pharmacy Solutions segment grew ~8% in 3Q17, led by ~$47 million from US cyclophosphamide sales and $27 million from the Claris acquisition. Notably, the Claris acquisition was expected to contribute ~$20 million to total sales.

In the Surgical Care segment, low double-digit anesthesia and critical care product sales growth were reported. Biosurgery sales also registered growth, which is expected to improve, led by the company’s efforts to enhance its commercial capabilities and expand its portfolio with new product launches.

Behind Baxter’s Strong 3Q17 Sales Growth

Renal Segment sales rose ~6% on an operational basis. The dollar amount of these sales came in at ~$1.0 billion. The company’s in-center hemodialysis business registered positive sales outside the US for the first time this year. The company’s acute renal and peritoneal hemodialysis businesses also registered solid growth in 3Q17.

Key growth drivers

Baxter reported continued strength in the US, which was mainly driven by its fluid systems, pharmaceuticals, and renal therapies businesses. International sales also improved across business segments, and the Claris acquisition made a higher-than-expected contribution to Baxter’s international sales. The company also benefitted from favorable foreign exchange due to the weaker US dollar.

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