Baxter International Hiding in Plain Sight
Credit Suisse analyst Kristen Stewart tells clients that the Colleague infusion pump has been plagued with problems for several years -- two recalls in 2005 and an FDA seizure of pumps in 2005. Baxter signed a consent decree in 2006 but had another recall last year, Stewart adds. It continues to talk to the FDA, and it continues to try fixing software problems with the pump.
"Baxter no longer expects the re-commercialization of Colleague in the second half of 2008," she told clients in mid-April research report. "While the delay is disappointing ... we are not that surprised given the history of delays."
Some pumps have been upgraded and remain on the market, says Stewart, adding that the product has lost only 3% to 4% of its market share in the past two years. Stewart, who doesn't own shares, is neutral on the stock. Her firm has had a recent investment banking relationship.
"They need to fix this [pump] problem now," says Morningstar's Stralow. Although the pump and heparin don't have a large revenue impacts relative to Baxter's total size, they are "hurting their image," she adds. "It's causing a problem with trust."So far, however, heparin and the pump aren't causing Baxter much grief among sell-side analysts. Eight have buy ratings and two are neutral, says Thomson Reuters. Despite its size -- revenue of $11.3 billion last year and a market capitalization of $38.4 billion -- Baxter seems to hide in plain sight when it comes to analysts' attention.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV