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On Thursday, Barclays (LON:BARC) analysts, led by Matt Miksic, maintained an Overweight rating on Baxter International (NYSE:BAX) shares, with a steady price target of $39.00. The decision comes after a thorough review of the company’s financial projections following the sale of its Vantive Renal Care business. With a market capitalization of $15.74 billion and a strong financial health score of "GOOD" according to InvestingPro, Baxter has maintained dividend payments for an impressive 55 consecutive years.
In a recent statement, Miksic noted, "Updating Our Sales and EPS Projections to Reflect the Sale of the Vantive Renal Care Business: We update our sales projections to reflect the company’s continuing operations, which exclude sales of renal care (now Vantive) in 2024, 2025 and beyond." The analyst team adjusted their earnings per share (EPS) estimates for the years 2024, 2025, and beyond to only include Baxter’s ongoing operations, excluding any contributions from Vantive.
The analysts provided a detailed review of the changes to their estimates, which are summarized in Figures 1-2 of their report. These updates are essential for investors to understand the financial outlook of Baxter without the renal care segment.
Regarding the company’s valuation, Miksic stated, "Reinstating at Overweight with Our Updated Price Target (NYSE:TGT) of $39: Our $39 price target is based on a 10.0x EV/EBITDA multiple on our projected next twelve months (NTM) EBITDA, 1-year forward, of $2.7 billion." This valuation is consistent with Baxter’s current trading multiple of approximately 10x NTM EBITDA and represents a discount to the company’s long-term average trading multiple of around 13x.
The reaffirmation of the Overweight rating and the $39 price target reflects Barclays’ view of Baxter’s value and growth potential without the renal care business. Baxter International’s stock performance will continue to be monitored by investors following these updates.
In other recent news, Baxter International Inc. has completed the sale of its renal care businesses, including Vantive Health and Gambro Renal Products, to Spruce Bidco for approximately $3.71 billion. This transaction marks a significant restructuring move as Baxter shifts its focus to core healthcare businesses. Additionally, José Almeida, the company’s chair, president, and CEO, has announced his immediate retirement, with Brent Shafer stepping in as interim CEO. The Board of Directors has initiated a search for a permanent CEO, considering both internal and external candidates. Furthermore, Baxter has appointed Ms. Anita Zielinski as Senior Vice President, Chief Accounting Officer, and Controller, effective February 21, 2025. In board developments, Mr. Peter M. Wilver will resign from his position, with Mr. Jeffrey A. Craig taking over as chairperson of the Audit Committee. These changes reflect Baxter’s ongoing commitment to strong leadership and governance in its operations.
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