Baxter Expected to Report Robust Revenue Growth in 2017



Robust revenue growth

Baxter International (BAX) has projected its YoY (year-over-year) revenue growth for 2017 at 1.0%–2.0% on a reported basis, 2.0%–3.0% on a constant currency basis, and 4.0%–5.0% on an operational basis. These numbers, however, don’t include the impact of the Claris acquisition scheduled to be completed in 2Q17. Baxter plans to provide updated guidance both for revenues and earnings per share after the deal is completed.

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Wall Street analysts have projected Baxter International’s revenues for 2017 to be close to $10.4 billion, which is a YoY growth of around 2.0%. Peers such as Abbott Laboratories (ABT), Boston Scientific (BSX), and Hologic (HOLX) are expected to report revenues of about $26.4 billion, $8.9 billion, and $3.1 billion, respectively.

Baxter makes up about 0.14% of the SPDR S&P 500 ETF’s (SPY) total portfolio holdings.

1Q17 revenue trends

Higher demand for Baxter’s anesthesia and fluid systems products was the key factor driving Baxter’s revenue growth in 1Q17. Besides growth in sales volumes, the company has also benefited from its gradual shift toward an optimal product mix.

Baxter’s total fluid systems sales in 1Q17 were around $585.0 million, which is a YoY operational growth of 13.0%. It was mainly driven by an increased uptake of the company’s IV (intravenous) solutions and IV Access Sets, a direct outcome of the increasing installed base for Baxter’s Sigma Spectrum infusion pump system. These developments in medication delivery have been key contributors to the company’s Hospital Products business, reporting revenues close to $1.6 billion in 1Q17, a YoY operational growth of around 10.0%.

Baxter’s Surgical Care business, which includes the company’s anesthesia, critical care, and biosurgery products sales, reported revenues close to $334.0 million in 1Q17, which is an operational growth of around 11.0% on a YoY basis. The company witnessed increased demand for its Transderm Scop patch used to prevent nausea and vomiting from motion sickness due to a temporary disruption in the supply of alternate products. The company’s fast-acting IV beta-blocker Brevibloc premixed injection also contributed to Baxter’s robust revenue growth in 1Q17.

In the next part, let’s look at the margin growth trends for Baxter International.


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