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What to Expect from Baxter International’s 2Q17 Earnings

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Analyst estimates

Baxter International (BAX) plans to announce its 2Q17 earnings results on July 26, 2017. For the last few quarters, the company has exceeded analysts’ earnings estimates. A company’s stock price is usually impacted by the deviation in actual results from analysts’ estimates. 

In 1Q17, Baxter International exceeded analysts’ EPS (earnings per share) estimate of $0.52 as well as the revenue estimate of ~$2.4 billion. BAX stock gained ~4.5% after its earnings results announcement on April 26, 2017.

According to analyst estimates, Baxter International’s 1Q17 earnings per share are expected to be ~$0.57. The company expects to register adjusted EPS of $0.55–$0.57.

In their most recent quarters, Baxter International’s peers Becton Dickinson (BDX), ResMed (RMD), and C.R. Bard (BCR) are expected to report YoY (year-over-year) rises in EPS of 3.9%, 1.4%, and 11.8%, respectively.

Investors can consider the Vanguard S&P 500 ETF (VOO) for exposure to Baxter International to participate in its growth potential. Baxter International accounts for ~0.15% of VOO.

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Profit margin estimates

Baxter International is focused on ramping up its R&D (research and development) investments to boost its innovation-led product pipeline and to augment sales. Analysts estimate the company’s R&D expenses to come in at $142 million in 2Q17. 

The company has been undertaking cost-containment initiatives, which have driven its SG&A (selling, general and administrative) expenses down. In 2Q17, analysts estimate SG&A expenses of $601 million, compared to the $698 million in SG&A expenses reported in 1Q17.

For 2Q17, Wall Street analysts project BAX to post a gross profit of ~$1.2 billion. The estimate represents ~44.4% of the company’s total revenues. The company’s gross profit margin in 1Q17 came in at ~44.3% of its total revenues. However, its net profit margins are expected to fall. For more on this topic, please read Baxter Expected to Report Significant Fall in Net Profit Margins.

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