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Baxter International (BAX) Q2 Earnings: What's in Store?

Baxter International Inc. BAX is scheduled to report second-quarter 2017 earnings on Jul 26, before the opening bell.

In the last reported quarter, the company recorded a positive earnings surprise of 13.7%, reaching the four-quarter average to 17.1%. Let’s see how things are shaping up prior to this release.

Factors at Play

We are encouraged by the company’s guidance for the second quarter of 2017 and full-year 2017. For the second quarter, Baxter estimates sales growth of about 2% at constant currency. Adjusted earnings per share are forecasted in the range of 55 cents to 57 cents versus the year-ago figure of 46 cents. Also, for full-year 2017, the company projects earnings in the band of $2.20 to $2.28 per share (from continuing operations, before special items), up from full-year 2016 earnings of $1.95. Of late, Baxter has accelerated its pace of acquisitions and strategic collaborations that enhance its product portfolio, thereby opening up significant long-term opportunities. Also, several recent FDA approvals are likely to boost growth in the yet-to-be-reported second quarter of 2017.

The company’s estimate revision trend is also encouraging. For the current year, Baxter saw two upward estimate revisions with no movement in the opposite direction over the last one month.

However, lower cyclophosphamide sales pose a threat to the company’s Integrated Pharmacy Solutions franchise. For the second quarter, a decline in cyclophosphamide sales is expected to impact the top line by low single digits. Also, the foray of group purchasing organizations (GPOs) in the U.S. intensifies competition for the company.

Earnings Whispers

Our quantitative model doesn’t point to an earnings beat this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Baxter International is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 51 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Baxter International carries a Zacks Rank #2, which increases the predictive power of ESP.However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Ranks #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may consider as our model shows that they have the right combination of elements to post an earnings beat in the upcoming quarter:

Becton, Dickinson and Company BDX has an Earnings ESP of +0.41% and a Zacks Rank #2. You can see">the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher Scientific Inc.TMO has an Earnings ESP of +0.44% and a Zacks Rank #2.

Stryker Corporation SYK has an Earnings ESP of +0.66% and a Zacks Rank #2.

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