Will This Cut Hurt Baxter International (BAX) Today?

NEW YORK (TheStreet) -- Baxter International (BAX) has been removed from Goldman Sachs' Conviction Buy list due to increasing supply constraints, the investment firm said Monday. Goldman gives the healthcare company a $77 price target. 

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Separately, TheStreet Ratings team rates BAXTER INTERNATIONAL INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate BAXTER INTERNATIONAL INC (BAX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 16.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $1,083.00 million or 14.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.84%.
  • The gross profit margin for BAXTER INTERNATIONAL INC is rather high; currently it is at 55.24%. Regardless of BAX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.46% trails the industry average.
  • BAXTER INTERNATIONAL INC's earnings per share declined by 33.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, BAXTER INTERNATIONAL INC reported lower earnings of $3.65 versus $4.18 in the prior year. This year, the market expects an improvement in earnings ($5.14 versus $3.65).

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