Baxter International Inc. BAX is set to report first-quarter 2015 earnings results on Apr 23. Last quarter, Baxter reported earnings of $1.34 per share, which beat the Zacks Consensus Estimate by 2.3% (3 cents). Let’s see how things are shaping up for this quarter.
Factors at Play
Baxter continues to expand its product portfolio by winning approvals for new drugs and products, particularly designed for the treatment of hemophilia. We expect the BioScience segment to report strong results owing to growing demand for Hemophilia drugs.
During the quarter, Baxter revealed positive efficacy and safety data from its Phase 3 clinical trial of BAX 817 – an investigational recombinant factor VIIa (rFVIIa) for hemophilia A or B patients who develop inhibitors to the treatment.
Upon approval, BAX 817 will broaden the existing portfolio of hemophilia and inhibitor treatments within Baxter’s BioScience business, which includes FEIBA and OBIZUR (approved in Oct 2014) for acquired hemophilia A.
Apart from BAX 111, Hemophilia A drug BAX 855 also holds promise. Developed in partnership with Nektar Therapeutics NKTR, BAX 855 is pending approval in the U.S. and Japan. The company is also continuing with its pediatric studies on BAX 855, upon completion of which, it expects to file for marketing authorization with the European Medicines Agency in 2016.
Although an innovative product pipeline is the key growth catalyst for Baxter, the impending split will remain an overhang. Further, foreign currency volatility will continue to hurt results in the near term. 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 -2.27% ESP. That is because the Most Accurate estimate stands at 86 cents per share, lower than the Zacks Consensus Estimate of 88 cents per share.
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:
athenahealth ATHN with an Earnings ESP of +45.45% and a Zacks Rank #1 (Strong Buy).
Biogen BIIB with an Earnings ESP of +0.51% and a Zacks Rank #1.
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