Baxter International (BAX) Falls Further As It's Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Baxter International ( BAX) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Baxter International as such a stock due to the following factors:

  • BAX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $178.9 million.
  • BAX has traded 2.7 million shares today.
  • BAX traded in a range 201.1% of the normal price range with a price range of $1.74.
  • BAX traded below its daily resistance level (quality: 45 days, meaning that the stock is crossing a resistance level set by the last 45 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on BAX:

Baxter International Inc., develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. The stock currently has a dividend yield of 3%. BAX has a PE ratio of 2. Currently there are 3 analysts that rate Baxter International a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Baxter International has been 3.3 million shares per day over the past 30 days. Baxter International has a market cap of $37.6 billion and is part of the health care sector and health services industry. The stock has a beta of 0.62 and a short float of 3.4% with 6.59 days to cover. Shares are down 5.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Baxter International as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Health Care Equipment & Supplies industry and the overall market, BAXTER INTERNATIONAL INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for BAXTER INTERNATIONAL INC is rather high; currently it is at 54.25%. 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, BAX's net profit margin of 11.42% is significantly lower than the industry average.
  • BAXTER INTERNATIONAL INC's earnings per share declined by 17.4% 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 $3.46 versus $3.65 in the prior year. This year, the market expects an improvement in earnings ($4.04 versus $3.46).
  • BAX, with its decline in revenue, slightly underperformed the industry average of 0.6%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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