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Baxter Shares Present Little Upside In Argus' View

Baxter Shares Present Little Upside In Argus' View - Baxter International Inc. NYSE:BAX

Argus retained its Hold rating on Baxter International Inc BAX 0.37% on valuation, saying the stock is "fully valued."

The brokerage said Baxter shares are trading at 27.1 times its 2017 EPS estimate, well above the peer average of 19.1 for its med-tech coverage universe.

Baxter reported solid second-quarter adjusted EPS of $0.46, above the consensus estimate of $0.40 and up from $0.19 in the prior-year period. Worldwide sales grew 4 percent to $2.59 billion.

Baxter has raised its 2016 adjusted EPS estimate to $1.69–$1.74 from $1.59–$1.67, and its operating margin forecast to 12 percent from 11.5 percent. It has also raised its operational sales growth forecast to 3–4 percent from a prior 3 percent.

Related Link: Sunshine Heart Acquires Aquadex Product Line From Baxter For $4 Million In Cash, 1 Million Shares Of SSH Common Stock

Based on the updated guidance, Argus also increased its adjusted EPS estimates to $1.69 from $1.59 for 2016 and to $1.79 from $1.67 for 2017.

Argus noted that the company has substantial resources (from the sale of Baxalta stock) that in turn may be used to cut debt, acquisitions, buybacks or dividend increases.

"We view the company's two business segments, Renal and Hospital Products, as mature businesses, though they could be bolstered by future acquisitions," analyst David Toung wrote in a note.

Shares of Baxter closed Friday's regular trading session at $48.59 and were up 0.7 percent at $48.93 Monday at time of writing.

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