Posted: Apr 13, 2010 10:02 AM by Ryan C. Fuhrmann

Back in March 2002, shares of Baxter (NYSE:BAX) nearly reached $60 per share. More than eight years later, the shares are again hovering around this level. Yet despite the stock performance malaise, sales and earnings growth have remained impressive and are expected to continue to do so going forward.

Company Overview
Baxter operates three primary business segments. The largest is BioScience, which accounted for 44.4% of 2009 total company revenues of $12.6 billion and provides proteins to treat hemophilia and related bleeding disorders. Sales in this segment grew 5% for the most recent fiscal year and include sales categories such as recombinants, plasma proteins, antibody therapies and regenerative medicines. 

Medication delivery is the second largest unit and saw 2009 sales increase 2% to $4.6 billion, or 37% of total sales. This segment sells products used for intravenous therapies, pre-filled vials and syringes for injectable solutions, and inhaled anesthetics. The final primary segment is renal, which provides products for the treatment of end-stage kidney failure. Renal accounted for 18% of last year’ sales for a year-over-year decline of 2%.

The majority of Baxter’s sales stem from overseas. Last year, 46% of sales came from the United States and Canada, 33.3% from Europe, 12.8% from the Asia Pacific Region, and 7.9% from Latin America. A weak U.S. dollar pushed international sales into negative territory (negative 1%) last year, but grew double-digits in 2008 and is projected to grow faster than domestic sales over the longer term.       

Outlook
Analysts expect Baxter to post top-line growth of 7.5% for 2010 for total sales of $13.5 billion. The current full-year consensus calls for $4.23 in earnings per share.  

Bottom Line
Baxter’s sales base is relatively stable as its products, though used for niche areas in healthcare, are a necessity for underlying patients and provide strong underlying market positions for the company. And while the stock has treaded water for nearly a decade now, diluted earnings have steadily increased from 2002. 

At a forward P/E of below 14, Baxter is below the forward multiples of medical supply rivals including Becton, Dickinson and Company (NYSE:BDX), Covidien (NYSE:COV), PerkinElmer (NYSE:PKI), and CR Bard (NYSE:BCR). Throw in a higher number of expected patients from recent healthcare legislation, and shares of Baxter look like a compelling investment opportunity at current levels. (To learn more, see The Industry Handbook: Biotechnology.) 

http://stocks.investopedia.com/stock-analysis/2010/Time-To-Buy-Baxter-BAX-BDX-BCR-COV-PKI0413.aspx