Baxter (BAX) Valuation Check After Novum IQ Class I Recall and Escalating Securities Lawsuits
Interest in Baxter International (BAX) has spiked after a wave of class action lawsuits and an FDA Class I recall tied to its Novum IQ Large Volume Pump. This has raised fresh questions about risk, liability, and long term earnings power.
See our latest analysis for Baxter International.
Those legal and recall headlines have landed on a stock that was already under pressure, with a steep year to date share price return decline and a deeply negative five year total shareholder return, suggesting momentum has clearly been fading rather than stabilising.
If this kind of healthcare risk reset has you rethinking your watchlist, it could be worth exploring other names in the space using our healthcare stocks as a starting point for fresh ideas.
With the share price down heavily over one and five years, yet trading at a sizable discount to analyst and intrinsic value estimates, investors now face a key question: is Baxter a contrarian buying opportunity or is the market correctly pricing in muted future growth?
Most Popular Narrative: 24.5% Undervalued
With Baxter International last closing at $18.16 against a narrative fair value of $24.07, the current price embeds a steep discount that hinges on a sharp earnings turnaround.
The analysts have a consensus price target of $29.0 for Baxter International based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $47.0, and the most bearish reporting a price target of just $19.0.
Curious how a loss making company could pivot to healthy margins and rising earnings within a few years? The narrative leans on an aggressive profit rebound, disciplined cost cuts and a re rating to a richer earnings multiple. Want to see exactly how those moving parts combine to justify that higher fair value?
Result: Fair Value of $24.07 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, sustained quality issues around Novum IQ and prolonged hospital IV fluid conservation could easily derail the expected volume recovery and margin rebound narrative.
Find out about the key risks to this Baxter International narrative.
Build Your Own Baxter International Narrative
If you see the story differently or want to dig into the numbers yourself, you can build a custom view in just minutes: Do it your way.
A great starting point for your Baxter International research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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