Baxter International Inc. (BAX) is set to report fourth-quarter 2014 results on Jan 29. Last quarter, Baxter reported earnings of $1.31 per share, which was in line with the Zacks Consensus Estimate.
Let’s see how things are shaping up for this quarter.
Factors at Play
Baxter boasts a strong product portfolio for the treatment of Hemophilia A. The company continues to expand its product portfolio by winning approvals for new drugs and products.
In Sep 2014, Baxter won two FDA approvals for HYQVIA and RIXUBIS. Notably, HYQVIA is a subcutaneous treatment for adult patients with primary immunodeficiency, while RIXUBIS is used for routine prophylactic treatment, control and prevention of bleeding episodes in children with Hemophilia B.
Baxter’s OBIZUR drug was approved by the FDA in October for treating bleeding episodes in adults with acquired Hemophilia A. In early December, Baxter filed a biologics license application (BLA) with the FDA for the approval of BAX 855. Developed in partnership with Nektar Therapeutics (NKTR), BAX 855 is an extended half-life, recombinant factor VIII (rFVIII) protein used for the treatment of hemophilia A.
The company recently filed a BLA with the FDA for the approval of BAX 111 – an investigational drug for the treatment of patients with von Willebrand disease (VWD). If approved, BAX 111 will be the first recombinant treatment in clinical development for VWD, the most common type of inherited bleeding disorder.
Although an innovative product pipeline is the key growth catalyst for Baxter, the impending split will remain an overhang. Further, higher operating expenses will continue to hurt profits at least over the next 12 months. Intense competition in the hemophilia franchise and lackluster hospital spending are other major concerns.
Earnings Whispers?
Our proven model does not conclusively show that Baxter is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Baxter has a -0.76% ESP. That is because the Most Accurate estimate stands at $1.30 per share, lower than the Zacks Consensus Estimate of $1.31.
Zacks Rank: Baxter has a Zacks Rank #4 (Sell).
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.
Stocks to Consider
Here are a few stocks worth considering that, per our model, have the right combination of elements to post an earnings beat this quarter:
AbbVie (ABBV) with an Earnings ESP of +1.18% and a Zacks Rank #2 (Buy).
Hologic (HOLX) with an Earnings ESP of +2.78% and a Zacks Rank #2.
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