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Baxter (BAX) Now a Strong Buy on Solid Strategic Initiatives


On Sep 17, Zacks Investment Research raised Baxter International Inc. BAX to a Zacks Rank #1 (Strong Buy).

Why this upgrade?

The upgrade was primarily driven by solid estimate revisions over the last 60 days.

The company’s estimate revision trend for the current year is quite impressive with eight estimates moving higher over the past two months. The Zacks Consensus Estimate has also been raised by a notable 9 cents to $1.72 per share.

Over the same time frame, the Zacks Consensus Estimate for full-year 2017 moved up by 7 cents to $1.97 per share.

Price and Consensus

Price and Consensus | Quote

Key Growth Factors

Shares of Baxter rallied 23.9% year to date, much better than the S&P 500’s 4.6% over the same time frame. Average volume of shares traded over the last three months was approximately 14.2 million, which is also a significant positive in our view.

The upgrade was also supported by a series of notable developments, which include the recent strategic tie-up with Satellite Healthcare (the sixth-largest provider of kidney disease services in the U.S) and the recognition of Baxter’s Sigma spectrum infusion system as a highly efficient infusion pump in drug library compliance (analysis by KLAS research firm).

Moreover, Baxter received approval for its PRISMAFLEX platform in China in the last reported quarter, which is a key catalyst. In fact, the company is set to launch its PrismaLung low-flow carbon dioxide removal device in France, Germany and Sweden. This is another noteworthy development in our view.

Notably, Baxter reported stupendous second-quarter of 2016 recently with adjusted earnings of 46 cents per share that crushed the Zacks Consensus Estimate of 39 cents. The bottom line also soared 142% year over year on solid sales of $2,585 million, which were ahead of the consensus mark of $2,504 million in the reported quarter.

Key Picks

Some better-ranked stocks in the broader medical sector include Quidel Corp. QDEL, Lantheus Holdings Inc LNTH and CryoLife Inc. CRY. Notably, all the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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