Baxter (BAX) Hits a 52-Week High: What's Driving the Stock?

Share price of Baxter International Inc. BAX, a global medical technology company, rallied to a new 52-week high of $51.43 on Mar 8, eventually closing a bit lower at $51.36.

This represents an impressive one-year return of approximately 29%, better than the S&P 500’s 16.9% over the same period. A glimpse at the recent price performance of the stock reveals a solid gain of 14.2% over the last three months, compared with the Zacks classified Medical Product sub-industry’s gain of almost 8.2%.

In fact, since the last earnings release of fourth-quarter fiscal 2016 on Feb 1, the company’s share price has gained 6.8% till yesterday’s close. Currently, Baxter carries a Zacks Rank #3 (Hold). Notably, the stock has a market cap of $27.57 billion.

Baxter International Inc. Price and Consensus

Baxter International Inc. Price and Consensus | Baxter International Inc. Quote

Key Catalysts

Recently, Baxter formed a strategic partnership with Taiwan-based process research and development and active pharmaceutical ingredient (API) manufacturer, ScinoPharm Taiwan, Ltd. The alliance aims at developing and commercializing five injectable drugs to be used in a range of cancer treatments, including lung cancer, multiple myeloma and breast cancer (read more: Baxter Partners ScinoPharm, Expands in Generic Injectables).

The partnership is expected to strengthen the company’s position in the huge and growing global market of generic injectables. It will also help Baxter increase patient access to difficult-to-manufacture, high-quality oncolytic medicines.

The company is also well poised on solid sales in its Hospital products and Renal products business segments. In this regard, we note that Hospital product sales in the just-reported fourth quarter increased 1% at constant currency (cc) on a year-over-year basis driven by solid demand for IV solutions, nutritional therapies and IV access administration sets. Meanwhile, renal products sales increased 5% to $1 billion. Renal product sales were driven by peritoneal dialysis products as well as increased global demand for continuous renal replacement therapies.

Additionally, a long-term expected earnings growth rate of 12.08% and an earnings yield of 4.26% compared with the industry’s gain of 1.40%, instills confidence among investors.

Estimate Revision Trend

The estimate revision trend for the stock has been encouraging.

The current quarter has seen four estimates move north over the last two months, with no movement in the opposite direction. As a result, the Zacks Consensus Estimate for the current quarter increased 18.6% to 51 cents per share over the same time frame.

Stocks to Consider

Better-ranked stocks in the broader medical sector include IDEXX Laboratories, Inc. IDXX, Avinger, Inc. AVGR and Fluidigm Corp. FLDM. All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.

IDEXX Laboratories has a long-term expected earnings growth rate of approximately 15.04%. Notably, the stock represents an impressive one-year return of 89.7%.

Avinger projects sales growth of 30.6% for the current year. The company posted a positive earnings surprise of 27% in the last quarter.

Fluidigm has a long-term expected earnings growth rate of 25%. The company posted a positive earnings surprise of 1.6% in the last quarter.

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