BAX

Should We Trust Analyst Ratings on Baxter International (BAX)?

Baxter International may be overvalued with poor growth indicators, but the 14 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $40.0 to $63.2 per share, for an average of $47.94. At today's price of $45.29, Baxter International is trading -5.53% away from its average target price, suggesting there is an analyst consensus of some upside potential.

Baxter International Inc., through its subsidiaries, develops and provides a portfolio of healthcare products worldwide. Based in Deerfield, IL, the large-cap Health Care company has 60,000 full time employees. Baxter International has offered a 2.7% dividend yield over the last 12 months.

Baxter International does not have a meaningful trailing P/E ratio since its earnings per share are currently in the red. Based on its EPS guidance of 3.29, the company has a forward P/E ratio of 13.8. In comparison, the average P/E ratio for the Health Care sector is 24.45. On the other hand, the market is undervaluing Baxter International in terms of its net assets because its P/B ratio is 3.9. In comparison, the sector average is 4.16.

If analysts are giving the the company a decent rating despite its hefty price point, it could be related to its strong cash flows. They likely put significant weight behind Baxter International's growth potential, as signaled by its 7.4% rate of revenue growth and solid rate of capital expenditure.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $11,362 $11,673 $12,784 $15,113
Revenue Growth n/a 2.74% 9.52% 18.22%
Gross Margins 41.9% 39.3% 39.9% 35.7%
Gross Margins Growth n/a -6.21% 1.53% -10.53%
Operating Margins 7.7% 13.8% 13.4% 5.8%
Operating Margins Growth n/a 79.22% -2.9% -56.72%
Net Margins 8.81% 9.44% 10.04% -16.1%
Net Margins Growth n/a 7.15% 6.36% -260.36%
Earnings Per Share $1.93 $2.13 $2.53 -$4.83
EPS Growth n/a 10.36% 18.78% -290.91%
Diluted Shares (MM) 519 517 508 506
Free Cash Flow (MM) $1,408 $1,159 $1,479 $532
FCF Growth n/a -17.68% 27.61% -64.03%
Capital Expenditures (MM) -$696 -$709 -$743 -$679
LT Debt to Equity 0.61 0.67 1.89 2.61
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

IN FOCUS