Baxter Beats Earnings Estimates, Raises Full-Year Guidance

  • Shares increase to highest price since at least 1980
  • ‘Couple of deals on the table,’ CEO says on conference call

Baxter International Inc., which last year spun off its drugs unit to form Baxalta Inc., beat analysts’ second-quarter earnings estimates and raised its 2016 guidance after what it said was a strong first half of the year.

Earnings, excluding certain items, were 46 cents a share, beating the 40 cents average of analysts’ estimates compiled by Bloomberg. Earnings for the full year will be $1.69 to $1.74 a share, it said in a statement Tuesday, up from the $1.59 to $1.67 the company predicted in April.

The shares rose 2.3 percent to $47.15 at 10:57 a.m. in New York, after earlier rising to $47.80, the highest intraday price since at least 1980. The stock is up 21 percent this year, as of Monday’s close.

Baxter has been attempting to refocus its business and in 2014 announced it would spin off its drugs unit and form Baxalta, leaving it to focus on kidney care and hospital products. Baxalta was bought by Shire Plc in June for $32 billion.

The Deerfield, Illinois-based company is looking for deal opportunities to drive growth, though valuations in health care are high, Chief Executive Officer Joe Almeida said on a conference call Tuesday discussing the quarterly results.

“There are a couple of deals on the table right now that we think are actionable,” Almeida said, without giving specifics. “We are pursuing them but we’re going to always keep our eyes on value.”

Biosurgery is an “attractive opportunity for growth through both innovation and geographic expansion,” he said.

Earnings Results

Revenue for the quarter grew 4.4 percent $2.59 billion, beating analysts’ $2.52 billion estimate. Sales of its hospital products rose 6.2 percent to $1.62 billion. Renal sales grew 1.7 percent to $965 million.

Vijay Kumar, an analyst with Evercore ISI, said investors expected the company to beat. “The key debate for investors was the magnitude of the beat and whether shares would react favorably,” he said in a note to clients. “This reaffirms our thesis for turnaround.”

For a Bloomberg Intelligence primer on Baxter, click here.

The company traced its growth for the quarter to its U.S. Fluid Systems franchise and its Sigma infusion pumps and IV-related products. Anesthesia products and hospital pharmacy compounding services also contributed to growth, Baxter said.

Net income was $1.21 billion, or $2.19 a share, up from $332 million, or 13 cents, a year earlier. Of that, $1.1 billion was from the sale of shares of Baxalta held after the spinoff.

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