Is Baxter International Stock Underperforming the S&P 500?

Deerfield, Illinois-based Baxter International Inc. BAX is a medical instrument manufacturer, providing an extensive portfolio of healthcare products focused on curing chronic and acute medical conditions. With a market cap of $17.2 billion, Baxter operates through Medical Products and Therapies (MPT), Healthcare Systems and Technologies (HST), and Pharmaceuticals segments.

Moreover, Baxter’s operations span over 100 countries across the globe. Companies worth $10 billion or more are generally classified as “large-cap stocks,” Baxter fits this bill perfectly. Given its extensive operations, the company valuation above this mark is unsurprising.

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BAX touched its 52-week high of $43.99 on Apr. 1, 2024, and is currently trading 25.1% below that peak. Meanwhile, the stock has soared 13.3% over the past three months, significantly outperforming the S&P 500 Index’s ($SPX) 4.4% dip during the same time frame.

However, the stock has significantly underperformed the broader market over the longer term. BAX stock has plummeted 14.1% over the past six months and 21.2% over the past 52 weeks, significantly underperforming SPX’s 95 bps uptick over the past six months and 10.7% gains over the past year.

To confirm the overall bearish trend and recent upturn, BAX has traded mostly below its 200-day moving average since early May 2024 with some fluctuations and remained above its 50-day moving average since mid-February.

Baxter International’s stock surged 8.5% after the release of its better-than-expected Q4 results on Feb. 20. Driven by the solid momentum from its new product launches and strength in Drug Compounding, Baxter’s pharmaceutical sales in the international markets surged by 10.9% year-over-year to $429 million. This offset the expected decline in its HST segment’s sales and MPT’s modest revenue growth. The company’s overall net sales inched up marginally compared to the year-ago quarter to $2.75 billion, which surpassed the Street’s expectations by 3.4%. Meanwhile, due to higher cost of sales and SG&A expenses, Baxter’s margins took a notable hit. Its adjusted net income dropped 8.8% year-over-year to $396 million. However, its adjusted EPS of $0.58 surpassed the consensus estimates by 11.5%.

Furthermore, the company expects its FY 2025 sales from continuing operations to grow between 5% to 6% and its adjusted EPS to range between $2.45 to $2.55, up from $1.89 in FY 2024, which boosted investor confidence.

Meanwhile, Baxter has notably outperformed its peer Align Technology, Inc.’s ALGN 29.9% decline over the past six months and 46.8% drop over the past year.

Among the 15 analysts covering the BAX stock, the consensus rating is a “Moderate Buy.” Its mean price target of $37.68 suggests a 14.4% upside from current price levels.

On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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