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Behind Baxter International’s Analyst Recommendations

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BAX’s analyst recommendations

Baxter International (BAX) released its 2Q17 earnings results on July 26, 2017. The company’s 2Q17 revenues and EPS (earnings per share) exceeded Wall Street analysts’ estimates. The company has a leading portfolio of renal and hospital products.

As of September 8, 2017, based on the recommendations of 17 companies in a Reuters survey, six (~35%) brokerage firms rated BAX as a “buy.” The company was rated “hold” by 10 (~59%) of the analysts, but one analyst rated the stock a “sell.”

Baxter’s return potential over the next 12 months is around 6.5%. On average, the analysts estimate that the company’s 12-month target price will be $66.92 per share, compared with BAX’s closing price of $62.84 on September 7, 2017.

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Target prices and revised recommendations

Baxter has the lowest one-year target price of $33 and a highest target price of $71. According to these targets, the maximum downside risk for BAX over the next 12 months stands at about -47.5%, while the maximum return potential is estimated to be 13%.

On August 17, 2017, Citigroup initiated coverage on BAX with a “neutral” rating and a price target of $63 per share. On September 1, 2017, RBC Capital reaffirmed its “hold” rating on BAX stock with a price target of $60.

As of September 8, 2017, peers ResMed (RMD), Becton, Dickinson, and Company (BDX), and C.R. Bard (BCR) have average broker target prices of $69.91, $206.46, and $303, respectively. These target prices represent one-year returns of -11.3%, 3.5%, and -5.9%, respectively.

To diversify the company-specific risks, investors can check out the iShares Russell 1000 Value ETF (IWD), which has ~0.24% of its total holdings in BAX.

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