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Yahoo
15-05-2025
- Business
- Yahoo
BAX Q1 Earnings Call: Revenue Tops Expectations, Margins Face Tariff and Cost Pressures
Healthcare company Baxter International (NYSE:BAX) reported revenue ahead of Wall Street's expectations in Q1 CY2025, with sales up 5.4% year on year to $2.63 billion. The company expects next quarter's revenue to be around $2.82 billion, close to analysts' estimates. Its non-GAAP profit of $0.55 per share was 14.8% above analysts' consensus estimates. Is now the time to buy BAX? Find out in our full research report (it's free). Revenue: $2.63 billion vs analyst estimates of $2.58 billion (5.4% year-on-year growth, 1.9% beat) Adjusted EPS: $0.55 vs analyst estimates of $0.48 (14.8% beat) Adjusted EBITDA: $639 million vs analyst estimates of $484.8 million (24.3% margin, 31.8% beat) Revenue Guidance for Q2 CY2025 is $2.82 billion at the midpoint, roughly in line with what analysts were expecting Management slightly raised its full-year Adjusted EPS guidance to $2.51 at the midpoint Operating Margin: 2.2%, down from 4.6% in the same quarter last year Free Cash Flow was -$315 million compared to -$13 million in the same quarter last year Constant Currency Revenue rose 7% year on year (2% in the same quarter last year) Market Capitalization: $15.55 billion Baxter International's first quarter results were primarily driven by robust sales growth across all its business segments, with notable outperformance in Medical Products & Therapies (MPT) and Healthcare Systems & Technologies (HST). Management attributed the top-line beat to increased demand for infusion systems, a strong recovery in IV solutions supply, and competitive wins in patient support systems. In addition, distributors began rebuilding inventory earlier than anticipated, and the company benefited from operational efficiencies, which helped offset ongoing cost pressures. Looking ahead, Baxter's guidance reflects both confidence in underlying business momentum and caution regarding external factors. Management highlighted persistent macroeconomic uncertainty, the impact of new and proposed global tariffs, and the ongoing transition following the sale of the Kidney Care business. CFO Joel Grade emphasized a continued focus on operational efficiency and targeted investments in innovation, while noting that new tariffs and foreign exchange headwinds are expected to weigh on margins for the remainder of the year. Baxter's leadership identified several key operational and market factors that shaped Q1 performance and set the context for the rest of the year. Strong segment growth, supply chain recovery, and competitive gains in core franchises were central themes. MPT Segment Outperformance: Medical Products & Therapies growth was supported by double-digit gains in U.S. infusion systems, led by the ongoing Novum IQ pump rollout. The business also benefited from improved supply and backorder clearance in nutrition products. IV Solutions Supply Recovery: The North Cove IV solutions facility returned to pre-disruption production levels, enabling removal of product allocations and prompting some hospitals and distributors to rebuild inventory ahead of schedule. Management expects continued conservation in hospital usage but anticipates normalization as allocations are lifted. HST Segment Momentum: Healthcare Systems & Technologies saw strong U.S. capital orders, particularly in Care and Connectivity Solutions. Management credited competitive wins in patient support and ICU product lines, as well as a healthy backlog supporting future growth. Tariff and Cost Mitigation Efforts: New global tariffs, particularly those affecting U.S. and China trade, emerged as a headwind. Management outlined mitigation strategies including supply chain optimization, selective pricing actions, and advocacy for product exemptions to offset estimated impacts. Ongoing Strategic Transformation: Baxter is transitioning following the sale of its Kidney Care business. Management highlighted ongoing cost containment efforts, reallocation of stranded costs, and investments in innovation, all intended to support long-term margin expansion and growth. Management's outlook for the coming quarters hinges on navigating macroeconomic headwinds, capitalizing on backlog strength, and executing operational improvements to drive sustainable growth and margin recovery. Tariff and FX Headwinds: The company expects new tariffs and adverse foreign exchange rates to pressure operating margins, with mitigation efforts only partially offsetting these impacts in the near term. Backlog and Capital Demand: A strong order book in Care and Connectivity Solutions and ongoing recovery in healthcare capital spending are expected to support revenue stability, though management is monitoring for demand shifts due to customer reimbursement challenges. Operational Efficiency and Innovation: Baxter is prioritizing supply chain optimization, targeted pricing, and accelerated investment in new product development to offset cost pressures and lay the groundwork for future margin expansion. Joanne Wuensch (Citi): Asked about specific mitigation strategies for tariffs and the sustainability of HST growth. Management detailed supply chain adjustments and targeted pricing, while maintaining a conservative outlook despite strong backlog. David Roman (Goldman Sachs): Queried the impact of IV solution allocation removal and long-term changes in hospital inventory practices. Management expects ongoing conservation but predicts gradual normalization as allocations end. Travis Steed (BofA Securities): Questioned margin pressures from cost reclassifications and the trajectory back to pre-pandemic margins. Management cited temporary impacts from MSA income and planning costs, with long-term margin expansion tied to innovation and product mix. Vijay Kumar (Evercore ISI): Sought clarification on the deceleration in Q2 growth and Novum IQ's market share gains. Management attributed Q2 guidance to ongoing IV solution conservation and built-in conservatism, while confirming Novum IQ has achieved low single-digit share gains. Pito Chickering (Deutsche Bank): Asked for a bridge between previous and updated EPS guidance given operational and tariff impacts, and probed drivers of U.S. CCS wins. Management pointed to strong operational execution offset by tariffs and FX, and highlighted commercial progress and digital enhancements in CCS. In the coming quarters, the StockStory team will track (1) progress on tariff mitigation and supply chain adjustments, (2) evidence of sustained order growth and backlog conversion in the HST segment, and (3) normalization in IV solutions demand as hospital inventory practices adjust. We will also monitor execution on new product launches and any updates on permanent CEO selection, as both could significantly affect Baxter's strategic direction. Baxter currently trades at a forward P/E ratio of 12×. In the wake of earnings, is it a buy or sell? Find out in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
Yahoo
20-02-2025
- Business
- Yahoo
Will BAX's Q4 Earnings Reflect Its Efforts to Counter Headwinds?
Baxter International Inc. BAX is scheduled to release fourth-quarter 2024 results on Feb. 13, before the opening bell. In the last reported quarter, the company's earnings beat the Zacks Consensus Estimate by 2.56%. BAX's earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 3.62%.Currently, the consensus estimate for revenues is pegged at $2.66 billion, indicating a decline of 31.5% from the prior-year quarter's reported figure. However, the consensus mark for earnings is pinned at 52 cents per share, implying a 40.9% year-over-year decline. Our model estimates total revenues to decline 3.3% at constant currency (cc) to $2.67 billion. Adjusted earnings per share are expected to decline 4.7% to 81 cents. Baxter is likely to report mixed fourth-quarter 2024 results, with strong momentum in certain product lines tempered by operational challenges and macroeconomic pressures. While the company posted adjusted EPS of 80 cents in the third quarter, revenues from continuing operations rose 4% to $2.7 billion. Key macro drivers that are likely to have shaped fourth-quarter performance include the ongoing recovery from Hurricane Helene, which significantly impacted Baxter's North Cove facility, and cost-control initiatives aimed at mitigating stranded costs following the Kidney Care divestiture. Additionally, some tailwinds from pricing initiatives and operational efficiencies are expected to have aided its performance. The Medical Products & Therapies segment is likely to have witnessed near-term pressure from Hurricane Helene, which disrupted IV solutions production, potentially causing a headwind of $150-$160 million to sales during the fourth quarter. However, Baxter's efforts to ramp up production, prioritize high-demand products and leverage global manufacturing sites should have partially offset the adverse impact. Strong growth in infusion therapies, particularly within the Novum IQ pump platform, remains a bright spot as it continues to gain market share through competitive conversions and new customer uptake. The trend is likely to have continued in the soon-to-be-reported quarter. Meanwhile, the Advanced Surgery division is expected to have sustained steady demand for its hemostats and sealants portfolio, supporting overall segment stability. Our model estimates total segmental sales to decline 5.1% at cc to $1.27 billion. Baxter International Inc. price-eps-surprise | Baxter International Inc. Quote In the Healthcare Systems & Technologies segment, fourth-quarter results are likely to reflect lingering softness in the U.S. primary care market, ongoing delays in international capital spending, and continued weakness in France and China. However, patient support systems should have shown resilience, growing in the low double-digits, supported by strong order pipelines and hospital investment in care and connectivity solutions. The Frontline Care division might have remained challenged, but a stabilization in the primary care market, coupled with new product launches in 2025, should have led to improved performance. Our model estimates total segment sales to decline 6.3% at cc to $744.8 million. Baxter's Pharmaceuticals segment is likely to have seen a rebound in the fourth quarter following a weaker third quarter, where injectable and anesthesia sales were affected by phasing issues and supply constraints. The company's injectable drug portfolio, with a pipeline of new product launches driving recovery, is likely to have delivered a strong performance. Drug compounding might have remained a growth driver that is likely to have benefited from strong demand. However, the segment's overall margin profile could have remained under pressure, and sustained cost optimization must have been crucial. Our model estimates total segmental sales to improve 5.3% at cc to $638.5 million. Looking ahead, while the impact of Hurricane Helene poses a short-term headwind, Baxter's focus on operational efficiency, pricing strategies and accelerating product innovation should have supported stabilization and modest growth in the fourth quarter. The company anticipates sales to decline in the low single digits on a reported basis as well as at cc. Adjusted EPS is expected to be between 77 cents and 81 cents. Our proven model does not conclusively predict an earnings beat for Baxter this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below. Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% for Baxter. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. Zacks Rank: Baxter currently has a Zacks Rank #3 (Hold). Here are a few medical stocks worth considering, as these have the right combination of elements to come up with an earnings beat this reporting cycle. Natera NTRA has an Earnings ESP of +61.91% and a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here. NTRA's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 36.37%. The Zacks Consensus Estimate for fourth-quarter EPS implies a rise of 34.4% from the year-ago reported figure. Masimo MASI has an Earnings ESP of +4.05% and a Zacks Rank #2 at present. The company is scheduled to release fourth-quarter 2024 results on Feb. 25. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.10%. The Zacks Consensus Estimate for EPS implies an improvement of 14.4% from the year-ago reported figure. Maravai LifeSciences MRVI has an Earnings ESP of +10.00% and a Zacks Rank #3 at present. The company is expected to release fourth-quarter 2024 results in February. MRVI delivered a trailing four-quarter average earnings surprise of 116.67%. The Zacks Consensus Estimate for fourth-quarter EPS implies a decline of 400% from the year-ago reported figure. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Baxter International Inc. (BAX) : Free Stock Analysis Report Masimo Corporation (MASI) : Free Stock Analysis Report Natera, Inc. (NTRA) : Free Stock Analysis Report Maravai LifeSciences Holdings, Inc. (MRVI) : Free Stock Analysis Report To read this article on click here. 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