Last Update04 Aug 25Fair value Decreased 19%
Baxter International’s consensus analyst price target has been significantly reduced, primarily driven by downward revisions in both revenue growth forecasts (from 5.2% to 3.7% per annum) and net profit margin (from 7.71% to 7.02%), resulting in a new fair value estimate of $29.89.
What's in the News
- Baxter provided Q3 and full-year 2025 sales guidance, projecting 6–7% reported sales growth from continuing operations and 3–4% operational growth.
- Vizient expanded its Reserve Program to include IV fluids via a strategic partnership with Baxter, enhancing supply chain resilience for critical products in the US healthcare system.
- Andrew Hider was appointed as Baxter's new CEO, bringing extensive global leadership experience in life sciences and automation, with a strong track record at ATS Corporation.
- Baxter will distribute Pieces Technologies’ Inpatient Platform, offering AI-driven documentation and care coordination tools to US hospitals and health systems.
- Baxter introduced Hemopatch Sealing Hemostat with room-temperature storage, an extended 3-year shelf life, and enhanced tissue-sealing and hemostatic properties.
Valuation Changes
Summary of Valuation Changes for Baxter International
- The Consensus Analyst Price Target has significantly fallen from $37.09 to $29.89.
- The Consensus Revenue Growth forecasts for Baxter International has significantly fallen from 5.2% per annum to 3.7% per annum.
- The Net Profit Margin for Baxter International has fallen from 7.71% to 7.02%.
Key Takeaways
- Focus on verticalized operating model and digital enhancements aims to drive innovation, execution, and profitable growth, boosting future revenue and net margins.
- Investments in Novum IQ pump and supply chain optimization target market share capture and margin expansion amidst tariff challenges.
- Baxter faces challenges from global tariffs, currency impacts, and leadership changes, potentially affecting margins, revenue, and strategic execution.
Catalysts
About Baxter International- Through its subsidiaries, provides a portfolio of healthcare products in the United States.
- Baxter International is focused on leveraging its verticalized operating model, aiming to enhance innovation, improve execution, and drive profitable growth, which could positively impact future revenue and net margins.
- The anticipated removal of allocations and normalization of IV Solutions inventory levels in hospitals is expected to improve revenue growth as utilization levels increase.
- Baxter is investing in expanding its Novum IQ pump platform and the associated consumables, aiming to capture market share and drive revenue growth.
- The company is targeting operational efficiency improvements and supply chain optimization to mitigate tariff impacts, which could lead to margin expansion.
- A strategic emphasis on digital enhancements and product launches in the Healthcare Systems & Technologies segment is intended to sustain revenue growth and improve margins.
Baxter International Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Baxter International's revenue will grow by 5.2% annually over the next 3 years.
- Analysts assume that profit margins will increase from -2.6% today to 7.7% in 3 years time.
- Analysts expect earnings to reach $967.1 million (and earnings per share of $1.9) by about July 2028, up from $-277.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.1 billion in earnings, and the most bearish expecting $523.1 million.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 25.6x on those 2028 earnings, up from -53.4x today. This future PE is lower than the current PE for the US Medical Equipment industry at 33.5x.
- Analysts expect the number of shares outstanding to grow by 0.59% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.53%, as per the Simply Wall St company report.
Baxter International Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Baxter International faces uncertainty due to newly enacted global tariffs and potential future tariffs, which may impact costs and, subsequently, net margins.
- The company is operating in a more dynamic global macroeconomic environment with increased volatility, which may create sales and earnings uncertainty.
- Foreign exchange rates are expected to negatively impact Baxter's adjusted operating margins and earnings per share due to their current infrastructure footprint outside the U.S.
- The planned exit from the IV Solutions market in China may affect top-line growth, putting pressure on overall revenue.
- The search for a new permanent CEO introduces operational and strategic uncertainty, which could impact the company’s ability to execute its long-term strategy and maintain investor confidence.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $37.091 for Baxter International based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $55.0, and the most bearish reporting a price target of just $27.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $12.5 billion, earnings will come to $967.1 million, and it would be trading on a PE ratio of 25.6x, assuming you use a discount rate of 8.5%.
- Given the current share price of $28.84, the analyst price target of $37.09 is 22.2% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
