Baxter International released Q3 earnings this past Thursday, 10/18.
Full year EPS guidance was narrowed as management trimmed off the top and increased the bottom of FY EPS expectations. They now expect FY$4.51-$4.54 a share, versus $4.49-$4.57. This will represent an increase of ~15% versus 2011. For Q3, BAX brought in an adjusted EPS of $1.14 per diluted share, a slight increase of 5% from Q3 2011. Management expects Q4 EPS to fall within $1.24 to $1.27. This falls within analyst expectations of $1.26 per share from $3.71 Billion in revenue.
Total revenues for the quarter were $3.5 billion, near flat with Q3 2011.
• Global Bioscience: $1.5 Billion (+5% vs 2011)
• Medical products: $2 Billion (0% vs. 2011)
Gross margin improved to 52.1%, the strongest it has been in 3 years. Expectations are that it will continue to grow for full year.
Net income rose to $583 Million from $573 Million last year.
Management guidance for full year 2012 was largely conservative at a 5% growth rate, however they predict that macro effects and exchange rate issues will erode that to roughly 2%.
Moving forward, BAX wants to continue to leverage their current product portfolio in new markets while trying to expand into “unmet medical needs. “
Following Q3 earnings, BAX shares rose above our price target of 61.90 to close at $62.08. Because of the price target being met, the model will be revised for a new target price and thesis by next Monday
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