Baxter International Expected to Post Strong 4Q17 Results



Earnings results

Baxter International (BAX) is expected to announce its 4Q17 and fiscal 2017 earnings results on or around January 30, 2018. The company announced stellar 3Q17 earnings results on October 25, 2017. Year-over-year, Baxter International expects to report 4Q17 sales growth of 4%–5% and constant-currency sales growth of ~2%. However, the company’s operational sales growth, expected to be impacted by three points due to Hurricane Maria, is forecast to be 1%–2%.

Peers Stryker (SYK), Medtronic (MDT), and Thermo Fisher Scientific (TMO) are expected to generate sales growth of approximately 7.5%, -1.1%, and 15.1%, respectively, in their recent quarters.

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Earnings expectations

Baxter International expects adjusted diluted EPS (earnings per share) of $0.56–$0.59, impacted by Hurricane Maria by $0.06. However, the company’s EPS are expected to be boosted by higher US cyclophosphamide sales and a lower tax rate.

Performance drivers in 4Q17

Baxter International is now better positioned to participate in hemodialysis business opportunities outside the United States. Whereas the company has seen stiff competition and price erosion in some of these markets, it witnessed growth in 3Q17 and is more focused and confident of competing effectively in these markets. Baxter International is the second-largest developer of dialyzers around the world, with Fresenius Medical Care being the biggest player.

In fiscal 4Q17, Baxter International expects that higher cyclophosphamide sales will offset Hurricane Maria’s impact. To participate in Baxter International’s growth potential while diversifying company-specific risks, investors could consider the iShares Russell 1000 Value ETF (IWD). IWD has a ~0.24% exposure to BAX stock.


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